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The United States has replaced Saudi Arabia as the world’s largest oil producer. The reason: fracking. But it is precisely these companies that are under pressure when oil prices are low. That calls the President of the United States, Trump, on the map, but he reacts differently than expected.
The US government USA He plans to use the extremely low price of oil to replenish his strategic reserves. It is planned to buy up to 75 million barrels of crude oil, said the President of the United States, Donald Trump. He said he would ask Congress for the necessary funds to help the government take advantage of the “record low price” in the oil market. “It is a good time to buy oil,” said the president.
According to the latest annual report, the US Strategic Petroleum Reserve. USA It can contain around 700 million barrels of crude oil. The price of a barrel of crude oil (159 liters) for the US oil-grade WTI for delivery in May had dropped below zero on the New York Stock Exchange on Monday. That means that buyers will receive money when they buy oil. The drop in price also dragged the stock market into the red.
Effect of transactions in the financial market.
The trigger for the extremely unusual situation is that a lot of oil is still being mined, especially in the United States, but at the same time it can hardly be found due to the economic downturn. Due to the crown crisis, significantly less gasoline is used. With only a few flights left, demand for kerosene has also plummeted.
However, Trump was confident that the price of oil would soon return to around $ 25 to $ 28 per barrel. The slide into the negative area is primarily an effect of transactions in the financial market, Trump said.
The WTI oil futures contract expires on Tuesday May, which is why many traders who only speculatively trade these financial instruments on the market even sold them at a loss. Otherwise, the actual delivery of the oil would have threatened them.
According to the US Energy Agency. USA (EIA), the United States was the largest oil producer recently, even before Saudi Arabia. The United States owes the boom primarily to the relatively expensive method of fracking production.
