It was the first item, from another source, on my Twitter feed this morning:
The screenshot says "The US government has quietly asked ..." What do they mean, "quietly asked"? Apparently President Trump didn't tweet the request. LOL. In fact, President Trump has been telegraphing for quite some time that he would do this. He now follows the pattern of every US president in modern history -- asking Saudis for help to keep the price of oil down.
And, of course, it validates the argument of those who suggest Saudi still "sets" the price of oil worldwide.
When a reader asked about this story, this was my reply (there is a "fact" in the story that I may have wrong but I will leave the reply as is):
1. Trump has said he wants the price of oil to trend lower. And I think he has already been quoted as asking the Saudis to increase production.
2. There have been several stories (same source, I assume) the last couple of days that airlines have said they will raise prices if oil prices continue to rise. In addition, at least one airline has already said it will raise prices regardless. I saw those articles as a public relations gambit to put pressure on the White House to get oil prices down.
3. The US refineries need to heavy oil (which they used to get from Canada and Venezuela) to balance the light oil. US refineries were optimized for heavy oil some years ago and now can only function if they have heavy oil to "balance" the light oil. Still inefficient, but that's their only choice.
4. As noted, Venezuela oil may or may not continue to flow -- White House obviously is aware of that.
5. California does not get oil from the rest of the US. It either uses its own in-state oil or imports (Saudi oil). California oil is now trading at $73 / bbl vs $64 for WTI. And I believe Saudi Arabia is ready to raise the price of their oil; whether that affects California or not, I don't know. Californians are already paying nearly a dollar more per gallon of gasoline than the rest of the country. It will probably get worse if Saudi does not increase its production.
6. California politics very, very dicey for some GOP candidates. Any relief at all would be helpful. Folks assume California across the state is anti-Trump, but not true. There are some California GOP reps in Congress. Some of those seats could be lost in the mid-term. High gas prices won't help.It goes without saying that midterm elections are only six or seven months away.
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And, On A Second Note -- About That Request For An Increase In Saudi Production
When asked about that, I also noted in an e-mail, not ready for prime time:
If Trump can use the bully pulpit to get the price of oil down, he will try. Yesterday, I thought we might have seen the bottom when I saw the price of oil advance (very) slightly, but now with WTI down again today, and then with news that the US government has asked Saudi Arabia to increase production, my hunch is WTI is headed lower before it heads higher.
Adding one large pipeline from the Permian and giving a huge tax break to operators in the Bakken would result in a 2 million bopd INCREASE literally overnight.
WTI is already solidly below $65 -- and driving season has begun. Something tells me the refiners over-prepared for the driving season. Boom and bust.
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De-FANGed
I believe one can find links that FANG was strongly recommended by Jim Cramer (CNBC and Mike Filloon (SeekingAlpha). I could be wrong on both accounts.
Yesterday, without question, Cramer was telling viewers to run away, not walk away, frlm FANG.
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read her.
Speaking of which, like Melania Trump, we haven't seen or heard much from Mike Filloon lately, or maybe I just haven't been paying attention.
FANG has gone from $136 / share to $111 / share in less than a month, I believe. You can fact check me on that.
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