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With oil prices sitting deep in the red for the first time in history, shocking even the most seasoned energy veterans, President Trump plans to turn the financial bloodletting into an opportunity for the United States.
“Based on the record low price of oil, it is at a level that is very interesting to a lot of people, we’re filling up our national petroleum reserves, strategic reserves and 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,” said Trump.
|USO||UNITED STATES OIL FUND L.P.||28.87||+1.37||+4.98%|
During Monday's session, West Texas Intermediate crude oil futures for May delivery cratered by 305 percent to -$36.73 a barrel. At a price below zero, buyers would be paid to take delivery as there are costs associated with transportation and storage. WTI closed at its lowest level since recordkeeping began in March 1983, according to Dow Jones Market Data.
The SPR was created between 1973-1974 after the oil embargo, as noted by the U.S. Department of Energy. Its purpose is to act as a shield against the disruption or depletion of oil supplies for the U.S.
If Trump's plan gets approved by Congress the SPR would act as the motherload of U.S. storage purchased on the cheap.
“We’ll ask for permission to buy it or store it one way or the other it will be full" he added.
Oil has been crushed this year as the coronavirus has eliminated global demand, even before dipping into negative territory crude had lost over 60 percent of its value this year alone. Adding fuel to the fire, a price war between Saudi Arabia and Russia that delayed a production cut in concert with OPEC, that failed to stop the global carnage.
As for a potential rebound in crude?
"Nobody has ever heard of negative oil before but it is short-term," Trump said.