President Donald Trump's promise to buy vast amounts of cheap oil to fill America's crude stockpile is doing little to help energy markets.
Although US oil prices initially rallied to nearly $34 Friday on the announcement, prices have since returned to crash-mode.
US oil prices tumbled 9% to $29 a barrel Monday morning as recession fears rock global financial markets. Brent crude, the global benchmark, plummeted 11% to $30.25 a barrel.
Trump said Friday that the United States will buy so much crude for the Strategic Petroleum Reserve that the administration will "fill it right up to the top."
"While helpful on the margins," analysts at RBC Capital Markets wrote in a note, "such policy pales in comparison to a coronavirus-plagued market that is measured in months or a price war that is expected to last several quarters or longer."
Demand for crude is nosediving because of the continued shutdown of major parts of the global economy.
At the same time, supply is swelling at precisely the wrong time. Saudi Arabia is flooding the market with cheap oil in retaliation for Russia refusing to cut output.
"We have not seen the bottom of the oil price just yet," Bjoernar Tonhaugen, head of oil markets at Rystad Energy, wrote in a statement.
https://news.google.com/__i/rss/rd/articles/CBMiUGh0dHBzOi8vd3d3LmNubi5jb20vYnVzaW5lc3MvbGl2ZS1uZXdzL3N0b2NrLW1hcmtldC1uZXdzLXRvZGF5LTAzMTYyMC9pbmRleC5odG1s0gFUaHR0cHM6Ly9hbXAuY25uLmNvbS9jbm4vYnVzaW5lc3MvbGl2ZS1uZXdzL3N0b2NrLW1hcmtldC1uZXdzLXRvZGF5LTAzMTYyMC9pbmRleC5odG1s?oc=5
2020-03-16 15:14:17Z
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