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Trump's proposed US oil reserve sale feels opportunistic, says CEO of global energy firm

President Donald Trump meets with Colombian President Juan Manuel Santos in the Oval Office of the White House in Washington, DC on Thursday, May 18, 2017.
Jabin Botsford | The Washington Post | Getty Images
President Donald Trump meets with Colombian President Juan Manuel Santos in the Oval Office of the White House in Washington, DC on Thursday, May 18, 2017.

President Donald Trump's proposal to sell half of America's emergency oil stock seems "opportunistic", according to the CEO of one of the world's largest natural resource companies.

When asked whether Trump would be able to implement his plan to sell half of the U.S. Strategic Petroleum Reserves (SPR), Tom Albanese, chief executive of Vedanta Resources, replied, "It feels a bit opportunistic… so let's see how that goes."

The White House budget, delivered to Congress on Tuesday, included aims to begin trimming SPR oil in fiscal 2018, which begins from October 1. The proposal predicted it would generate around $500 million in the first year of sales and as much as $16.6 billion over the following decade.

Further to selling half of the nation's emergency oil stockpile, Trump's first complete budget plan seeks to boost government revenues by sanctioning drilling in the Arctic National Wildlife Refuge and looks to sell off some government owned electricity transmission lines.

The proposals, as with much of the budget, appear likely to face opposition on Capitol Hill.

'Some discipline by OPEC is probably a good thing'

Elsewhere, the Organization of the Petroleum Exporting Countries (OPEC) are set to meet in Vienna on Thursday to announce whether to prolong cuts in order to reduce a global supply overhang. OPEC and other oil producing nations, including Russia, have cut output by around 1.8 million barrels per day in the first six months of 2017.

"My own sense is that for the oil industry, some discipline by OPEC is probably a good thing. It keeps prices in a more stable position and it will allow the global oil industry to continue its own reinvestment," Albanese added.

OPEC and non-member oil producers appeared to edge closer to securing a deal on extending output cuts by nine months on Wednesday. OPEC's kingpin, Saudi Arabia, and top non-member, Russia, have publically announced they favor a nine month extension to cut oil output and the market seems to have priced this in as its base-case scenario.

Market is 'expecting more' from OPEC

While speculation has been plentiful in the run up to OPEC's May meeting, Energy Aspect's chief oil analyst Amrita Sen suggested the 13 member oil cartel would need to follow up any pledges made on Thursday with the appropriate action.

"Summer demand is picking up, refineries are back, if (OPEC) can get it right, if they can cut exports I do think we see 60 (dollars a barrel) by late summer," Sen told CNBC on Wednesday.

"But I think that the market now, given they announced nine months already a few weeks ago, is expecting a little bit more, maybe deeper cuts, maybe at least keeping the door open possibly for more cuts if inventories don't fall," Sen predicted.