Three weeks into Trump 2.0 and it seems oil prices have grinded lower for most of Mr. Trump’s nascent tenure. The front-month Brent futures contract initially saw support, testing the $77/bbl handle on 11 Feb. However, prices are currently flirting with the $74/bbl level – where it appears to find buy-side support. While lower oil is good optics for a politician, gas prices in Santa Rosa, California hit $5/gal this week. Eggs are still a sore point in the United States, as indicated by higher-than-expected inflation in January. A big contributor to the uptick in inflation for a surge in the price of eggs, which climbed by over 15% in January and by 53% y/y. On the bright side, Donald Trump confirmed that he had a “lengthy and highly productive” phone call with Russian President Vladimir Putin, with both parties agreeing to begin negotiation talks. Ukrainian President Volodymyr Zelensky stated he has spoken with Trump about a “lasting, reliable peace”. Coupling this news with a 4 mb build in US crude oil inventories in the week ending 7 Feb, as announced on 12 Feb, oil prices dropped from an intraday high of $77.30/bbl on 11 Feb to under $75.10/bbl the next day, recording a significant bearish Marubozu candle, with the sellers dominating the market from open to close. It will be key to keep an eye on how a potential Russia-Ukraine peace deal unfolds, with its broader implications on global oil trade flows. There’s a lot of moving parts and a lot of counterparties to keep track of but for now, the bears seem to really like this market.
