Will US troops quit guarding Syrian oil fields as negative oil prices become surreal?

RT
Mon, 20 Apr 2020 21:14 UTC

© Global Look Press/ZUMAPRESS.com/Heline Vanbeselaere, Global Look Press/ImageBROKER.com/Valentin Wolf

US benchmark oil futures plummeted to negative numbers on Monday, as if the coronavirus epidemic hadn't already pushed the world into the Twilight Zone. Social media took time to appreciate the icing on a very surreal cake.

Futures contracts for West Texas Intermediate (WTI) - the US oil benchmark fuel - plunged over 100 percent on Monday to a record-breaking -$37.63, the first time going negative in history and a bizarre event by any measure. Even if it hadn't happened in the midst of a pandemic that has laid waste to the US and many other countries' economies, it would be a shock.

The contracts expire on Tuesday, and a total collapse in oil demand - given the lockdowns keeping most of the world's population from driving or flying anywhere - combined with a glut of supply apparently forcing some oil tankers to linger offshore for lack of places to store their contents has made the contracts worse than worthless. Despite the claims of some on social media, however, one can't go to the gas station and demand payment to fill up one's tank.

Even as the country enters uncharted economic territory, the one-track mind of some in the American media establishment could only filter this news through the prism of Orange Man Bad. By one count, it took less than a minute for the jackals to pounce.

Others imagined a new future for American foreign policy now that the Pentagon would presumably no longer be plundering Middle Eastern petroleum.

Plenty of armchair 'investors' were willing to weigh in...

...and price comparisons were numerous.

Oil played a starring role in a few memes.

OPEC slashed production by nearly 10 million barrels per day starting next month, though given continuing lockdowns, it may not be enough. At least we now know who will be blamed if it isn't.

Comment: Media round-up:

Rock-bottom demand is rapidly becoming a sort of 'new normal' as producers have not reacted fast enough, given the amount of demand disruption that we've seen around the world according to Lipow Oil Associates LLC President Andrew Lipow.

Market analyst David Madden said that OPEC was too slow and didn't cut deep enough to offset the fall in demand. "Oil storage facilities, not just in the US, but elsewhere around the world, will fill up over the next six weeks and when that happens, producers will simply be forced to shut production."

American shale oil companies are running in the red. The US government has already signed a historic $2.2 trillion stimulus package, while the Federal Reserve has cut its rates to zero and the government possibly paying these firms not to extract any more oil.

Plummeting oil futures dragged US markets down as stocks closed at a dip on Monday, with the Dow (down 550 points), S&P (declined 1.6 percent) and Nasdaq all finishing at a loss. Chevron and Exxon Mobil lost over 4 percent each - and the energy and utilities sectors both lost over 3 percent on the S&P 500, constituting its worst-performing industries. Over 22 million jobs have been lost with experts warning the resulting depression could be the worst in a lifetime.

Trump said "We're looking to put as many as 75 million barrels into the reserves themselves, that would top it out." Asked whether the US would halt oil shipments from Saudi Arabia as storage space dwindles, the president said only "We'll look at it ... we certainly have plenty of oil, so I'll take a look at that."

Trump's aid proposal:

President Trump on Tuesday proposed establishing a relief fund for the oil and gas industry after oil prices plunged to below $40 a barrel as the coronavirus pandemic continues to wreak havoc on the world's economy.

"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!."