Oil prices begin recovery amid pressure to finance the struggling industry
Oil prices rose nearly 20 percent Wednesday, a sign of a stabilizing market after trading went into negative pricing for the first time in history at the start of the week.
West Texas Intermediate settled at $13.78 per barrel, up from around $11 Tuesday.
Those prices are a remarkable jump from Monday, when oil traded as low as negative $40 a barrel. The negative prices were caused by a drastic 30 percent cut in the demand for fuel that left companies effectively paying others to store their crude.
The uptick in pricing comes as traders shift to buying contracts for oil to be delivered in June, giving buyers more time to sort where they will store thousands of barrels of oil amid an unprecedented drop in demand.
A $14 barrel is still a far cry from prices in the mid $20 range seen for most of March.
The low prices have pushed President Trump to direct the secretaries of the Treasury Department and the Department of Energy to look for solutions, which could involve financial assistance or creative solutions to boost storage space.
Republican lawmakers have been putting increasing pressure on Treasury Secretary Steven Mnuchin to route coronavirus stimulus funding to oil companies.
“We face a real and present danger of seeing hundreds, if not thousands of oil producers shuttering, an event that will profoundly and negatively impact the industry, its financial partners and consumers for years to come. The prospect of once again becoming reliant on oil imports is an unacceptable situation and we should do all we can to avoid it,” lawmakers wrote in a letter spearheaded by Sen. Kevin Cramer (R-N.D.) and signed by 10 other Republican senators.
But Mnuchin said Tuesday evening that some of the funding lawmakers have asked the administration to ensure oil companies have access to is for national security purposes, such as to pay Department of Defense contractors.
“This has national security issues, but different, and we look forward to both looking at what existing capabilities we have and that will be something we may need to go back to Congress and get additional funding for,” Mnuchin said at a White House briefing.
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