Trump's Diesel Comments Send US Crude Prices Plummeting
US President Donald Trump's statement last week to keep America's diesel fuel at home has had an unexpected effect on oil prices. The goal was to bring down record fuel prices for American farmers and truckers ahead of the midterm elections, but the market interpreted his words differently.
The price that started falling was not diesel, but American crude oil. Brent crude, the benchmark for oil traded around the world, stood at $100.88 a barrel on Thursday, while West Texas Intermediate (WTI), the benchmark for US-produced oil, was at $91.89. The gap between the two major oil benchmarks widened to almost $9 a barrel, about $1.40 wider than a day earlier.
Analysts say that this episode is unusual because the move came from the US side. Between September 18 and 28, Brent gained $1.41 a barrel, while WTI lost $7.70. The United States Oil Fund LP (NYSE:USO), which tracks WTI futures, fell 5.3% between the September 18 and 30 closes, while the United States Brent Oil Fund LP (NYSE:BNO) slipped only 0.8%.
According to Trump, 'Let's not send out the diesel. We make a lot of diesel.' The White House later denied a report that a 90-day export ban was being prepared, but on Sunday, Trump told Fox News, 'We're thinking about it very seriously.' Experts believe that if exports were blocked, refiners would have less reason to run at full speed, leading to weaker refinery demand for WTI relative to Brent.