The historic drop in oil prices on Monday got President Trump’s attention.
On Tuesday, Trump tweeted the following: “We will never let the great U.S. Oil & Gas Industry down. 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!”
Prices on Monday dropped for the first time in history into negative territory to a record minus $37.63, driven by traders dumping oil as world demand for oil dramatically has dropped. The prices could result in bankruptcies for small oil companies.
At a Monday evening press conference on the coronavirus, Trump said he is pushing to to buy oil to put in the federal government’s Strategic Petroleum Reserve.
“We are looking to put as much as 75 million barrels into the reserves themselves that would top it out, that would be the first time in a long time it’s been topped out and we’d get it at the right price,” Trump said.
“This is a great time to buy oil,” Trump also said.
When asked about oil prices later in the press conference, Trump called the situation a “financial squeeze” for traders and noted the demand is the main cause behind the woes.
“Nobody is driving a car, essentially in the world,” Trump said.
The supply and demand of oil is out of balance with the world demand down as nations respond to the coronavirus. In the meantime, in early March, Saudi Arabia and Russia began increasing production.
Since that time, both those nations along with the rest of OPEC agreed to cut production by 9.7 million barrels per day. The hope is low oil prices will also force additional millions of barrels per day out of the market as companies cut production. Some experts estimate world demand has dropped by 25 million barrels per day. Storage of the excess oil is also becoming an issue as tankers on land and at see are filling up with no where for the oil to go or be used.
Prices were rebounding on Tuesday, with trading at $3.80 per barrel at 9:30 a.m.