United States

With the media narrative once again focused squarely on Trump and the "Russian connection", something which will unlikely change over the next week absent "fireworks" elsewhere, the story of potential military intervention in South Korea has understandably dropped from the front pages. Although with a second US aircraft carrier now en route to the Korean Peninsula, and with Trump desperate for another "big bang" distraction, is it shortsighted to underestimate the potential of another geopolitical hotspot emerging in the next few days.

Over the past week a lot of digital ink has been spilled trying to preview and predict what will take place during Trump's first official mammoth visit abroad, when over the next 8 days after an overnight flight on Air Force One, Trump will hopscotch from Saudi Arabia to Israel to the Vatican. He’ll close his trip with a pair of summits in Brussels and Sicily. The stakes are great for Trump who makes his debut on the international stage: he’s the first president since Jimmy Carter to not travel abroad during his first 100 days in office.

While much was made of this week's drop in US crude production, it was driven by an Alaskan supply drop, not the Lower 48 whose production is at Aug 2015 highs. WTI back above $50 on the back of more OPEC jawboning appears to have everyone convinced this time is different, but for the 18th week in a row US oil rig counts rose (by 8 to 720).

The following article by David Haggith was published first on The Great Recession Blog:

The last time OPEC (and Non-OPEC) member nations sat down to attempt a coordinated increase in oil prices by cutting production they succeeded... for about three months. Every since then, oil has been on a gradual declining path, boosted by a surge in US shale output and declining global demand, with WTI recently even sliding sliding below OPEC's implicit price floor of $50/barrel. Which is why on May 25, after the failure of the first 6 month production cut, the same nations will try the same exercise, this time looking to cut output for 9 months, and hoping for a different outcome.