Maybe it was the result of a tweet by President Trump threatening to shoot down any Iranian boats harassing US ships in the Strait of Hormuz. Whatever it was, it caused oil prices to recover by another 22% for another day as West Texas Intermediate crude rose more than $3 a barrel to finish Thursday’s trading at $16.87 on the New York Stock Exchange. A far cry from Monday’s negative price of oil which led to Internet jokes that a roll of toilet paper was worth more than a barrel of oil.
If the President’s tweet sparked fears about oil supply in the Middle East, it worked in London where the Brent crude rose $1.37 reaching $21.74 for a 6.7% increase.
Earlier in the week, Brent crude dropped to a two-decade low.
It was Wednesday when President Trump said he had instructed the US Navy to “shoot down and destroy” Iranian gunboats that “harass our ships at sea.”
Trump’s tweet said: “I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea.”
“It is perhaps the oldest Middle East oil trick in the book: you want higher oil prices, threaten to start breaking things,” analysts at Rabobank said in a morning note.
Tensions in the Middle East can lead to crude oil price increases as that would indicate a potential disruption to oil shipments around the world and cause possible supply shortages.
Natural gas prices didn’t react the same way as oil as they fell 12 cents to reach $1.82 per MMBtu on the New York Mercantile Exchange.
But area oil stocks were up including Chesapeake Energy which rose more than 36% or $7.31 to settle at $27.49 for the day. ConocoPhillips added $1.18 and ended the day at $36.18. Devon was up 83 cents at $10.57 for a 8.5% gain.
Marathon Oil increased 31 cents at $4.84 while ONEOK grew $1.87 to hit $29.20 per share. Phillips 66 was up $1.80 at $59.97 while American Electric Power dropped $2 and finished Thursday at $83.02 a share.