President Donald Trump on Tuesday ordered his administration to come up with a plan to aid US oil companies struggling with a massive supply glut and record low crude prices. “We will never let the great U.S. Oil & Gas Industry down,” Trump tweeted.
I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!
Trump's tweet came a day after the price of the benchmark US crude crashed to its lowest level ever in New York trading, falling to -US$37.63 a barrel.
The culprit was slowing demand for oil as the coronavirus pandemic hammers global economic growth, along with a supply glut fueled by a price war between Saudi Arabia and Russia that's caused crude storage in the US to grow scarce.
An agreement struck last week between OPEC and other major oil producers to cut just under 10 million barrels per day of production seemed unable to reassure traders.
The squeeze was also fueled by Tuesday's expiration of May futures contracts - meaning traders who buy and sell the commodity for profit were suddenly scrambling to offload the contract, or else they would have to take physical delivery of the commodity despite having no place to store it.
That sent share prices of US oil companies plunging. The pain appeared set to continue on Tuesday, with oil at US$2.81 a barrel around 1420 GMT and the Dow Jones Industrial Average trading 1.8 per cent in the negative.