Oil prices fell on Wednesday afternoon after US President Donald Trump announced that Iran was backing off its retaliatory stance, and was, as the US President put it, “standing down”.
Oil prices were trading sharply down following Trump’s announcement.
WTI, which had spiked to over $65 on Tuesday, had already started to fall earlier on Wednesday after President Trump sent a reassuring tweet that all was well. But prices fell continued to fall, and started to plummet well below pre-spike levels.
WTI was trading hands at $59.45 per barrel by 1:40pm EST—a 5.18% drop on the day. The price of a Brent barrel had fallen to $65.22 at that time, a 4.47% loss on the day, and down from a high of $71.17 on Tuesday.
Natural gas prices are also down on the day by 1.25%.
President Trump called the Wednesday de-escalation a “very good thing for the world,” although oil bulls, who had reaped big rewards following Iran’s fruitless missile attack on US bases in Iraq, may disagree.
U.S. oil companies were already rushing to hedge their production at the higher oil prices on Tuesday. According to industry sources that spoke to Bloomberg, many shale producers added more hedges for their production to lock in the higher prices for their output this year and the next.
Most of the major oil stocks were trading down on Wednesday as well, including ConocoPhillips (NYSE: COP), which was down 2.45%, Exxon (NYSE: XOM)at -1.39%, Royal Dutch Shell (NYSE: RDS.A) -1.67%, Chevron (NYSE: CVX) -0.84%, Phillips 66 (NYSE: PSX) -3.62%), and EOG Resources (NYSE: EOG) -1.78%.
Morgan Stanley had advised its clients to trade on the rally before it faded, saying that the recent increase in oil prices could give energy stocks a boost after a lousy decade.
By Julianne Geiger for Oilprice.com
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