By Barani Krishnan
Investing.com - Crude prices stayed under $30 per barrel on Tuesday, even as stocks on Wall Street rose on the Trump administration’s plans to send checks to Americans and defer their tax payments to help them weather loss of income and business from the coronavirus pandemic.
“There’s no demand spike you can see immediately for oil, even if the administration puts checks into the pockets of every American,” said John Kilduff, founding partner of New York energy hedge fund Again Capital. “With this pandemic, no one’s driving, flying or even taking public transportation. Where is the demand for oil?”
West Texas Intermediate, the New York-traded benchmark for U.S. crude prices, was down 74 cents, or 2.6%, at $28.26 per barrel by 1:18 PM ET (17:18 GMT).
Brent, the London-traded global benchmark for crude, slid 92 cents, or 3.1%, to $29.13.
WTI is headed for a first-quarter loss of 53% and Brent a loss of 55%, their most ever for a quarter.
Some analysts saw even further losses, saying crude prices could drop into the teens.
“Oil could easily be in the teens at the bottom. Could even be low teens at the lowest,” Abhi Rajendran, director of research at Energy Intelligence, told CNBC.
“The main driver is for, a week or two, we could have global market oversupply of over 10 million barrels per day (bpd). Which is insane and unprecedented.”
On Wall Street, the Dow, S&P 500 and Nasdaq were up about 3% after Treasury Secretary Steve Mnuchin said the U.S. federal government was looking to get cash into the pockets of Americans as fast as possible to cushion an economy hit by Covid-19.
“(W)e’re looking to send Americans checks now,” Mnuchin told a media briefing, adding that that would preferably be within two weeks. He said details would come later after discussions with Congressional Republicans.
The administration was also working out a proposed tax holiday package with the Democrats who control the House of Representatives, Mnuchin said, adding to various stimulus and support measures separately announced by the Federal Reserve to support credit markets.
"We're going big," Trump told the same briefing.