Trump planning meeting with big oil CEOs to provide assistance

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oil markets

While the U.S. economy as a whole is continuing to hurt, one of the country’s most promising sectors has quickly gone under substantial pressure. America’s oil and energy sector, an area that had been seeing an explosion in production over the past couple of years, has been badly hit not only due to the ongoing coronavirus pandemic but also plummeting oil prices, which has recently hit an 18-year low. As such, President Trump has scheduled a meeting with the top oil CEOs to discuss how he can help out the sector.

The meeting is scheduled to take place on Friday at the White House and will feature the CEO’s of Chevron (NYSE:CVX), Exxon Mobil (NYSE: XOM), Continental Resources (NYSE:CLR), as well as other executives of top oil companies across the country. While at this point, it doesn’t seem like that President Trump will advocate for direct federal aid, especially since a coronavirus stimulus package is already in the works, its speculated that he could consider taking smaller actions such as restriction certain regulations and shipping laws. In a separate statement, the American Petroleum Institute said that its members wouldn’t be seeking any government subsidies at this time.

According to the Wall Street Journal, the founder and CEO of Continental Resources, Harold Hamm, has personally asked the federal government to intervene in the ongoing Russia-Saudi price war which has been damaging oil companies around the world. One option floating around is the possibility of placing tariffs on oil imports from these two countries. Another possibility includes government-mandated production cuts in order to help push oil prices back up.

Neither of these two options seems particularly likely to happen either. Although the U.S. government has expressed its dissatisfaction over the price war going on between Russia and the Saudi’s, this economic conflict shows little sign of resolving itself anytime soon. The two countries ended up falling apart when Russia refused to go along with further supply. In response, the Saudi’s ramped up production significantly to send prices plummeting and hurt the Russian economy in retaliation. The kingdom hopes that the Russian government will end up caving to the Saudi’s original plan, but time will tell whether this will prove to be the case.

West Texas Intermediate is trading at around $25.8 per barrel, while international benchmark Brent crude is trading closer to $31.6 per barrel. This is only marginally higher than the $20 per barrel price point seen earlier in March, which broke a new 18-year low for the energy commodity. At least for now, it seems that these low prices are here to stay, and high-cost producers are going to operate at a loss until that changes.

 

Continental Resources Company Profile

Continental Resources is a U.S. oil and gas producer targeting in the Bakken Shale in North Dakota and the Scoop/Stack plays in Oklahoma. At the end of 2018, the company reported net proven reserves of 1.5 billion barrels of oil equivalent. Net production averaged 298 thousand barrels of oil equivalent per day in 2018, at a ratio of 56% oil and 44% natural gas and NGLs. – Warrior Trading News

 

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