Crude Oil Futures Decline as Trump Urges Saudi Arabia to Cut Prices

Crude oil futures experienced a decline on Friday morning, influenced by comments from US President Donald Trump. He suggested that Saudi Arabia should lower oil prices to help bring an end to the ongoing conflict between Russia and Ukraine.

Current Market Prices

As of 9:59 AM on Friday, March Brent oil futures traded at $78.20, marking a decrease of 0.11 percent. Concurrently, March crude oil futures for West Texas Intermediate (WTI) were at $74.50, reflecting a decline of 0.16 percent. Additionally, February crude oil futures on the Multi Commodity Exchange (MCX) began trading at ₹6444 compared to the prior close of ₹6484, down by 0.62 percent. March futures were also down, trading at ₹6414 against the previous close of ₹6450, a decrease of 0.56 percent.

Trump's Comments at Davos

In a virtual address at the World Economic Forum held in Davos on Thursday, Trump urged Saudi Arabia to lower oil prices, stating that a reduction in prices could lead to an immediate end to the Russia-Ukraine conflict. He pointed out, "If the price came down, the Russia-Ukraine war would end immediately. Right now, the price is high enough that that war will continue. You got to bring down the oil price." He criticized Saudi Arabia for not acting sooner while also encouraging the Kingdom to boost its proposed investment in the US.

Investment Proposal and Market Implications

Trump suggested that Saudi Arabia should increase its investment in the US from the stated $600 billion to around $1 trillion. He indicated, "I think they’ll do that because we’ve been very good to them." However, financial experts such as Warren Patterson, Head of Commodities Strategy at ING Think, noted that Trump’s call for lower oil prices is likely to face challenges. With Russia increasingly aligning itself with OPEC members through the OPEC+ alliance, and many key members requiring higher oil prices for their fiscal needs, convincing OPEC to raise production may not be straightforward.

US Crude Oil Inventories and Economic Indicators

On a related note, the US Energy Information Administration (EIA) recently released a petroleum status report showing a decline in crude oil inventories for the week ending January 17. According to the report, US commercial crude oil inventories fell by 1 million barrels from the previous week, totaling 411.7 million barrels, which is about 6 percent lower than the five-year average for this time of year. However, total motor gasoline inventories increased by 2.3 million barrels and remained 1 percent below the five-year average for the same period.

Trading Trends for Other Commodities

During the initial hour of trading on Friday, February natural gas futures were priced at ₹300.40 on MCX, up by 0.91 percent from the previous close of ₹297.70. On NCDEX, April dhaniya contracts traded at ₹8428, reflecting an increase of 0.31 percent from the previous close of ₹8402. Conversely, March jeera futures prices dropped to ₹22375 from ₹22445, marking a decrease of 0.31 percent.

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