Report: The Trump Administration May Pay Drillers to Keep Oil in the Ground
The Department of Energy is considering a creative proposal to help ease the country's glut of oil, which has pushed pricing to a nearly two-decade low. It's reportedly crafting a "keep-it-in-the-ground" plan that would pay oil companies not to produce oil. The Bloomberg report said that the U.S. would essentially buy as much as 365 million barrels worth of in-the-ground oil reserves, which would count toward the country's emergency stockpile.
The U.S. oil benchmark price, WTI, recently fell below $20 a barrel, its lowest level since 2002. Several issues are weighing on oil prices, including a massive decline in consumption due to the COVID-19 pandemic. Analysts expect global oil demand to fall by 27.6 million barrels per day (BPD), or roughly 27.6%, this month, while May demand will be about 19.3 million BPD below last year's level. All that excess oil is piling up in storage facilities around the world.
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Source Fool.com
