With the perfect storm of global demand destruction and the world running out of places store tens of millions of barrels of crude raining down on oil markets, U.S. President Donald Trump is looking at the glass half-full, doubling down on his plan to fill up the country's Strategic Petroleum Reserve.
On Monday afternoon, the price of U.S. benchmark, West Texas Intermediate, fell by over 300 percent, settling at -$37.63 per barrel. And as the unprecedented crash sent shockwaves through markets, U.S. President Donald Trump suggested the U.S. should add roughly 75 million barrels of oil to the country's Strategic Petroleum Reserve, though he provided no details on how the exactly the administration would purchase the crude without approval from Congress.
Trump explained at Monday night's COVID-19 press briefing, “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." Trump added, "This is a great time to buy oil...Nobody's ever heard of negative oil before. "
The Strategic Petroleum Reserve is the world's largest supply of emergency oil reserves. It was established by the U.S. government in the 1970s to minimize the impact of disruptions in the oil product supply chain.
As of last Friday, the SPR held 635 million barrels of crude oil, consisting of 384.7 million barrels of sour crude and 250.3 million barrels of sweet crude.
While the plan to buy crude oil at historic lows isn't exactly outrageous, it may find some pushback from Democrats who blocked the Department of Energy's previous proposal to buy up as much as $3 billion worth of crude as part of the massive economic stimulus package in March.
By Michael Kern for Oilprice.com
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