Crude oil has recovered from the bottom. Donald Trump will intervene

Last year, Donald Trump's tweets were able to cause large increases on the New York Stock Exchange and often appeared at a time when black clouds were gathering above the market. Now the US president has commented on oil prices and the rate fired immediately.

In 2019, Donald Trump repeatedly assisted the US stock market index. When declines began, or even record increases slowed down, there was information that America is great, the economy is doing well and it will be even better. If that was not enough, we had the opportunity to learn about the assumptions of new economic programs, progress in negotiations with China and other details that were a clear signal for investors: you can buy. And you have to, because there were also those who based their entire investment strategy on ... Donald Trump's Twitter. And they were doing well, because there were many indications that the US authorities were interested in rising share prices. Along with them, crude oil prices also remained high.

Coronavirus crushed oil prices

However, the coronavirus pandemic caused not only the stock market - and worldwide - to plunge, but also prices dropped significantly oil. No wonder, because in closed cities the demand for "black gold" is minimal. Sea and air transport has also been significantly reduced, and if we add the usual panic and overreaction in such cases, it is not surprising that oil prices have been the cheapest since 2003. The barrel already cost less than USD 26, but it was also influenced by the price war of the largest producers.

Chart oil Crude, interval H4. Source: xNUMX XTB xStation

In crisis situations, OPEC and Russia customarily limit production to keep prices at a satisfactory level. This time, however, it did not happen because Vladimir Putin did not agree to limit production. Saudi Arabia also reacted nervously.

Donald Trump to the rescue

Record low oil prices are a problem primarily for countries that earn on its sale. As usual, however, the stronger want to weaken those who have smaller financial reserves as much as possible.

“This is very devastating for Russia because if you look at it, its entire economy is oil-based, and we have the lowest prices in decades. I would say it is very bad for Saudi Arabia, but they also got into a war for prices, a war for production " - Donald Trump said on Thursday at a meeting with journalists, but also added that he would respond "in due time".

The effects did not have to wait long. Historical minima are already a memory. The price of oil increased by 10% and continues to rebound. Also because the US authorities met with Saudi Arabia's energy minister this week. The details of the talks are unknown, but investors have no doubts about what they concerned, because the facts testify: the US Ministry of Energy announced the purchase of oil from small and medium-sized producers. It wants to acquire 30 million barrels to replenish strategic stocks. I must admit that the price opportunity is excellent.

Saudi Arabia does not provide any information yet, but it is obvious that a drop in prices below mining costs - which was the case when the price hit the low - is not beneficial for anyone and it was only a matter of time how much the price will rebound. Analysts say that in uncertain times, even if we manage to defeat the coronavirus relatively quickly, the economy will lick our wounds for a long time and prices as high as $ 100 per barrel will probably not return soon.