Oil prices head lower as Democrats vote against rescue plan for economy

Bloomberg/Fuel Fix:

Oil dropped toward the lowest level since 2003 as prospects for a deal between OPEC and Texas to limit production appeared to fade, while a U.S. coronavirus rescue package ran into political delays.

Futures in London fell around 3% to near $26 a barrel, while West Texas Intermediate rose after the April contract expired Friday. Texas Railroad Commissioner Ryan Sitton landed a rare invitation to attend OPEC’s June meeting on Friday, but just hours later hopes for an agreement began to unravel as his call to curb output was criticized by regulators and drillers.

Democrats in the U.S. Senate blocked a Republican economic recovery package of nearly $2 trillion, describing it as too focused on corporations at the expense of workers. Major support measures remain likely but could take additional time for the two parties to work out their differences. Asian stocks tumbled, while U.S. equity futures dropped 5% and hit their down limit.

The chance that either Saudi Arabia or Russia will back down from their price war seems remote, with President Vladimir Putin unlikely to submit to what he sees as the kingdom’s oil blackmail, according to Kremlin watchers. The brinkmanship is taking place against a rapidly darkening demand outlook with more nations going into lockdown to tackle the virus. Some traders see crude demand collapsing by as much as 10 to 20 million barrels a day.

“Oil could head to $10 to $15 a barrel very quickly” if OPEC and Texas can’t reach an agreement on cutting production, said Stephen Innes, chief Asia market strategist at Axicorp Ltd. “Any traders with the capacity to store oil are probably putting their hands up, looking at the contango.”

Brent for May settlement lost 2.7% to $26.26 a barrel on the ICE Futures Europe Exchange as of 1:06 p.m. in Singapore after dropping to as low as $24.68 earlier. That’s less than its close of $24.88 a barrel on Wednesday, which was the lowest since May 12, 2003.
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The position of the Democrats is absurd.  Corporations need help to not only save more current jobs but to make sure they are still around when the virus subsides.  It is this kind of short term thinking that should also lead to the demise of the Democrat party, many of whose voters work for corporations.

Pipeline companies are already cutting nearly $2 billion because of the slow down.