Oil company executives reeling from a plunge in prices are scheduled to meet Friday with President Donald Trump in Washington as the administration seeks ways to help the beleaguered industry.
The meeting, which was confirmed by the American Petroleum Institute is to take place just as Saudi Arabia unleashes a record volume of crude into the already-glutted global oil market, escalating a price war with Russia. Trump, who once hailed the unprecedented plunge in oil prices as a "tax cut" for American consumers, has stepped up efforts in recent days to intervene as the rout threatens to wipe out tens of thousands of jobs in America's shale patch.
Benchmark crude oil fell 17 cents to settle at $20.31 a barrel Wednesday. Brent crude oil, the international standard, fell $1.61 to close at $24.74 a barrel.
Over the past quarter the price of crude has fallen harder than at any point in history, plunging almost 70% to levels not seen since 2002.
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According to the American Petroleum Institute, U.S. crude inventories rose by 10.5 million barrels last week, well over twice what energy analysts had been expecting.
During a news conference, Trump bemoaned the oil war that has broken out between Saudi Arabia and Russia, which has hastened the decline. Trump said he spoke this week with Russian President Vladimir Putin, and that he has also spoken with Saudi Crown Prince Mohammed bin Salman.
"There's so much oil," Trump said. "In some cases, it's probably less valuable than water."
Executives from companies such as Exxon Mobil Corp., Chevron Corp., Occidental Petroleum Corp. and Continental Resources Inc. are expected to attend the meeting with Trump, according to people familiar with the meeting who asked not to be named to discuss nonpublic matters.
Among the topics expected to be discussed are possible tariffs on oil imports into the U.S. from Saudi Arabia, and relief from the Jones Act that requires ships that transport goods between U.S. ports to be American flagged, according to one of the people.
Representatives of the White House did not immediately comment.
Attendees represent companies across the oil industry, including independent producers such as Continental and Devon Energy Corp., at least one midstream pipeline operator, Energy Transfer Partners, and one refiner, Phillips 66, according to another person familiar with the meeting. Representatives of the American Petroleum Institute are also attending the meeting.
No independent offshore oil producers were invited to the summit. And no European oil majors, even those with substantial U.S. operations, are invited, so Royal Dutch Shell Plc, BP Plc, Equinor ASA and others are left out.
The companies have advanced widely varying prescriptions for dealing with the glut of crude fed by the Russia-Saudi oil price war and collapsing demand from the coronavirus.
Big oil companies such as Exxon and Chevron for instance have typically opposed any kind of government intervention in crude markets including tariffs and mandated production cuts. With better access to capital and diversification of businesses, they're more resilient than smaller operators to ride out the rout.
But some U.S. independent explorers, whose tenacity and technological innovation began the shale oil revolution, argue that such low crude prices risk killing the America's domestic industry, leaving the country dependent on foreign producers once again.
Continental Resources Chairman Harold Hamm has urged the U.S. to impose tariffs on Saudi and Russian crude, while several oil industry trade groups and refiners have warned against that step. The American Petroleum Institute has asked the White House to find a diplomatic solution. The American Exploration and Production Council previously floated the Jones Act waiver.
"Natural gas and oil will be critical to our nation's economic recovery, and the industry's message to the administration is sharing actions it is taking during this challenging time and highlighting that history has proven that markets work," the American Petroleum Institute said in an emailed statement. "We are not seeking any government subsidies or industry-specific intervention to address the recent market downturn at this time."
Texas Railroad Commissioner Ryan Sitton, one of three regulators in the largest oil-producing state, says Trump should offer that the U.S. cut production at home for matching reductions from Saudi Arabia and Russia.
Whiting Petroleum, a company focused on shale projects in North Dakota and Colorado, said Wednesday that it was filing for Chapter 11 bankruptcy protection, citing "the severe downturn in oil and gas prices driven by uncertainty around the duration of the Saudi/Russia oil price war and the covid-19 pandemic." Whiting, which has roughly $1 billion of debt coming due over the next year, said it had reached an agreement in principle with some creditors on a comprehensive restructuring.
Information for this article was contributed by Ari Natter, Jennifer A. Dlouhy and Kevin Crowley of Bloomberg News, by staff members of The Associated Press and by staff members of The New York Times.
Business on 04/02/2020