Get all the latest news on coronavirus and more delivered daily to your inbox. Sign up here.
U.S. Treasury Secretary Steven Mnuchin has a full plate helping rescue the nation’s wounded economy and coronavirus-ravaged small businesses, and now he can add the oil market’s troubles to his to-do list.
“Obviously it’s a pretty extraordinary situation where you see the front month of oil futures trade negative,” remarked Mnuchin during Tuesday’s coronavirus task force briefing.
West Texas Intermediate crude oil futures turned negative for the first time in history Monday falling an unprecedented 305 percent to -$36.73 per barrel, the lowest level since recordkeeping began in March 1983, according to Dow Jones Market Data. Those declines extended Tuesday as the June contract plunged 43 percent to $11.57.
|USO||UNITED STATES OIL FUND L.P.||80.06||+0.66||+0.83%|
The United States Oil Fund, an exchange-traded fund [ETF], was halted several times during the Tuesday session.
While the former Goldman Sachs executive acknowledged the U.S. is awash with “too much supply” he signaled that keeping America’s leading energy position is still a priority.
“The president is determined, we want to maintain our energy independence and the president has asked me to look at all of our options and we’re doing that,” he said.
FOX Business’ inquiries to the U.S. Treasury Department for more specifics on what those options may be were not returned at the time of publication.
For the first time in history last year, the U.S. was a net exporter of oil, and Stephen Schork of The Schork Report says keeping that title in the current environment is impossible. “We’ve lost that dominance in the here and now that is not too say we can’t regain it, we shall once we run through a number of bankruptcies through the oil patch,” Schork predicted during an interview with FOX Business’ Stuart Varney.
The oversupply in the oil market became elevated when the coronavirus grounded global airlines, cruise operators and forced millions of Americans off the road into working from home. Supplies ballooned even further after a tit-for-tat price war between Saudi Arabia and Russia delayed a long overdue OPEC production cut creating even a bigger glut in the market that has left many traders holding the bag.
With so much crude supply available on the cheap, Trump has indicated he would like to top off the Strategic Petroleum Reserve, which was created in the 1970s to give America oil stability. If that occurs, there are still not enough options for additional storage.