President Trump, “Oil Prices are too high, Not good”

President Trump, “Oil Prices are too high, Not good”

President Trump, “Oil Prices are too high, Not good”

$USO, $OIL, $UGA

“An SPR release would have a psych impact on the market. It may not translate into lower gasoline prices, but it would immediately bring down Crude Oil prices until the market adjusts”

The Trump Administration is considering tapping into the nation’s emergency supply of Crude Oil as political pressure grows to rein in rising gasoline prices before congressional elections in November.

No decision has been made to release Crude Oil from the 660-M bbl stockpile, known as the Strategic Petroleum Reserve (SPR), but options under review range from a 5-M bbl test sale to release of 30-M bbl LTN learned Friday night. An even larger release is possible it were to be coordinated with other nations.

The national unleaded average gasoline price rose to $2.89 Friday, +63c or 28% from a year ago, according to data from AAA.

The US gasoline price average is expected to range between $2.85 per gallon and $3.05 per gallon through Labor Day, according to the group.

And as average prices close in on $3/gal, and President  Trump is not shy about voicing his displeasure.

“Oil prices are too high, OPEC is at it again. Not good!” he said on Twitter in June.

On the 4th of July, President Trump Tweeted: “The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two way street. REDUCE PRICING NOW!”

Crude Oil prices have retreated since hitting a 3 year high in New York early this month

WTI Crude, the U.S. benchmark, settled at 71.01 bbl Friday, +68c on the day but -3.8% on the week.

Analysts are split on the effect an SPR release would have and how long any impact would last. Depending on its size and timing, a Crude Oil sale might leave the market unmoved, or have a real impact on prices.

An SPR release would have a psych impact on the market. It may not translate into lower gasoline prices, but it would immediately bring down Crude Oil prices until the market adjusts

A release of Crude Oil in September or October could cut gasoline pump prices just in time for November’s mid-term elections.

President Trump could also use it as a tool to persuade buyers of Iranian Crude Oil to halt their purchases in the run-up to 4 November when US  sanctions against the Islamic Republic are due to snap back.

It is on the cards: Congress has already mandated the sale of 11-M bbl starting as soon as 1 October.

The DOE begin planning its scheduled sales months in advance, so the timing of a scheduled sale as a market-management tool probably has been in the planning stages for some time now.

The US Crude Oil stockpile, the world’s largest supply of emergency Crude, is stored in huge underground salt caverns along the US Gulf Coast.

It was created in the 1970’s after the Arab Oil Embargo sent prices skyrocketing and forced Americans to ration gasoline, and is mainly meant to be used in emergencies.

But, it has been tapped in the past to bring down domestic gasoline prices, such as by President Bill Clinton in the 1990’s.

While US Energy Secretary Rick Perry indicated he has no interest in utilizing the reserve, telling reporters last month it is “there for emergencies,” ultimately the decision is up to President Trump.

The Energy Department declined to comment and the White House did not respond to a request for comment.

Symbol Last Trade Date Change Open High Low Volume
NYSEArca:UGA 33.76 13 July 2018 0.46 33.4 34.12 33.36 7,100
HeffX-LTN Analysis for UGA: Overall Short Intermediate Long
Neutral (0.10) Neutral (0.03) Bullish (0.42) Neutral (-0.14)

America First and MAGA

Have a terrific weekend

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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