Oil prices go negative – and Washington is paralyzed over what to do

Reports that the Trump administration was considering paying oil companies not to pump oil have not comforted oil executives.

Oil prices go negative – and Washington is paralyzed over what to do

Airlines, restaurants, retailers, farmers and a slew of other industries are getting billions of dollars in bailouts as the U.S. economy contracts because of the coronavirus pandemic — but America’s oil companies are hitting a dry hole.

U.S. oil futures prices fell to their lowest-ever level by far on Monday, at -$37.63 per barrel, meaning owners of the futures contracts were paying to offload them. It broke the previous low price record near $10 a barrel set in 1986 and comes as policymakers struggled to address the glut of crude that has seen the industry reverse a decade-long boom and sink into a deep recession that threatens to push dozens of companies into bankruptcy.

U.S. policymakers for decades have focused their policies on ensuring the oil supply shocks that damaged the U.S. economy in the 1970s would not return, and they created a national reserve to backstop the market and ensure supplies were available to fill up the nation's fleet of automobiles and trucks. But with U.S. production hitting record levels late last year and storage tanks now brimming with fuel, Washington has few tools at its disposal to lift oil prices to levels needed to sustain the energy industry.

“The U.S. government's ability to fundamentally change this situation are minimal,” said Raymond James oil analyst Pavel Molchanov. “The real problem is the fact that upwards of 20 percent of global oil demand is currently offline, mainly due to the Covid-related lockdowns.“

President Donald Trump won praise last week for helping push Russia and Saudi Arabia to end a market standoff and reduce shipments oil. But those cuts won't take effect until next month, hurting near-term prices for crude and leaving oil producers scrambling to find storage for their production.



A White House spokesperson referred questions about any new efforts to aid the oil industry to the National Security Council, which did not respond. A Department of Energy spokesperson did not reply to questions.

After Congress rejected an Energy Department request for $3 billion to buy oil to top off the nation's Strategic Petroleum Reserve, the agency altered course and is now allowing companies to lease space in the facilities for 30 million barrels of oil. But even that amount, as well as another 47 million barrels that could flow into federal storage in the coming weeks, will do little to sop up the extra production that is adding more than 2 million barrels per day to private storage tanks.

Reports that the Trump administration was considering paying oil companies not to pump oil under a plan that would reclassify those supplies still in the ground as part of the nation's strategic reserves have not comforted oil executives.

Dan Eberhart, chief executive of oil services company Canary LLC, dismissed the talk of paying drilling companies to keep the oil in the ground as mostly “headfakes.”

“A tidal wave of bankruptcies is about to hit the sector,” Eberhart said.

U.S. May crude oil futures sunk under $6 a barrel as traders were forced to roll out of their investments ahead of the contract's expiration. The active June contract was down about $2.50 to $22.60 a barrel.


And industry officials who have met with the White House have previously said that administration officials have assured Saudi Arabia that the federal government would not directly aid U.S. oil and gas companies, and would instead allow the market conditions to drive business decisions to reduce the oversupply in the market.

OPEC, Russia and a groups of other producers agreed to cut production by 9.7 million barrels per day starting in May, and producers in the U.S. and Canada are shutting down wells in a retrenchment that's expected to remove millions of more barrels in the coming months. Until that supply shrinks or there is a rebound in global demand — which is estimated to have declined by 20 million to 30 million barrels per day — there is little chance the industry will return to firm footing.

To make matters worse, a group of oil tankers that left Saudi Arabia before the country agreed to cut production is currently heading toward the U.S. That oil will further strain storage capacity unless another country buys them before they reach the U.S.

“It’s like some movie from the 1980s where the U.S. president and the Soviet premier come to an agreement" to halt a nuclear war, "[but] one plane missed the call back,” said one industry official tracking the ships but was not authorized to speak to the press.

Source : Politico USA More   

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Schiff and Nadler seek probe of Barr for comments on Trump move to fire intel watchdog

The Democrats say the AG’s comments may have violated DOJ’s code of professional conduct.

Schiff and Nadler seek probe of Barr for comments on Trump move to fire intel watchdog

Two top House Democrats are asking internal Justice Department watchdogs to investigate Attorney General William Barr for recent comments they say misrepresented the facts about President Donald Trump's decision to fire Michael Atkinson, the inspector general of the intelligence community.

Intelligence Chairman Adam Schiff of California and Judiciary Chairman Jerry Nadler of New York say Barr's comments, in an April 9 interview with Fox News' Laura Ingraham, may have violated DOJ's code of professional conduct, which requires officials to operate with "candor."

The lawmakers asked Justice Department inspector general Michael Horowitz to investigate whether Barr violated professional responsibilities in his comments about Atkinson and whether he improperly interfered in Atkinson's efforts to alert Congress to alleged misconduct by Trump last fall.

"The role of Attorney General Barr and other senior DOJ officials, in coordination with the White House, in attempting to prevent the whistleblower complaint from reaching Congress — as required by law — warrants your attention," they wrote, referring to the complaint that sparked Trump’s impeachment trial.

Trump abruptly fired Atkinson earlier this month, citing Atkinson's decision last fall to inform Congress about the existence of a whistleblower complaint alleging that Trump sought to pressure the Ukrainian government to investigate his Democratic adversaries. Atkinson deemed the complaint "urgent" and credible, triggering a legal requirement to inform Congress. The White House and Justice Department intervened, overruling Atkinson's determination and blocking him from sharing it with Congress.

Ultimately, Atkinson did not share the complaint with Congress, but the public pressure surrounding the incident prompted the administration to share the details with lawmakers in September.

Yet Barr, in his Fox interview, suggested Atkinson deserved to be fired because he violated Justice Department protocols, a characterization that Nadler and Schiff say falsely impugns the former inspector general’s actions.

Justice Department officials acknowledged receiving the letter from the Democratic chairmen.

A senior DOJ aide said despite the allegations, Barr's assessment of Atkinson's conduct was correct. Atkinson, the official said, should have deferred to the Justice Department's legal opinion that Congress was not entitled to the substance of the complaint and was incorrect to inform lawmakers of its existence and that he disagreed with DOJ's opinion to bar lawmakers from receiving it.

Schiff and Nadler noted that Atkinson's decision to inform Congress of the existence of the complaint was subsequently blessed by acting Director of National Intelligence Joseph Maguire, who told lawmakers the same month that Atkinson handled the matter "by the book."

It's unclear whether Horowitz will consider the lawmakers' request — he received an identical one from Democratic Sens. Dianne Feinstein of California and Mark Warner of Virginia last week as well. But the veteran watchdog has tangled with Trump repeatedly in recent years. Most notably, Horowitz defended Atkinson's actions surrounding the whistleblower report after Trump's decision to remove him.

"Inspector General Atkinson is known throughout the Inspector General community for his integrity, professionalism, and commitment to the rule of law and independent oversight," Horowitz said at the time. "That includes his actions in handling the Ukraine whistleblower complaint, which the then Acting Director of National Intelligence stated in congressional testimony was done 'by the book' and consistent with the law."

Horowitz also issued reports sharply critical of the FBI's handling of both the Clinton email investigation and the Trump-Russia investigation, simultaneously providing fodder for Trump and his allies while debunking a string of conspiracy theories about the handling of both probes.

In their letter, Nadler and Schiff also copied Jeffrey Ragsdale, head of DOJ's Office of Professional Responsibility, which handles internal disciplinary matters.

Source : Politico USA More   

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