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“ ‘I am not doing this to try and get the price of oil up, what I’m trying to do is keep it from crashing into the single digits.’ ”
That’s Ryan Sitton, the commissioner of the Texas Railroad Commission, on CNBC Friday afternoon explaining his efforts to help do his part to stabilize crude-oil prices, which have plunged, shedding half of their value since late February, due to the twin shocks of a coronavirus pandemic and a glut of supply created by an unexpected price war between Saudi Arabia and Russia.
The TRC has been described by some as a little-known regulator for energy players in the American oil patch. On Thursday, the TRC, via Sitton, added its voice to the chorus calling for a truce between the Saudis and Russia. The oil-producing behemoths have driven crude-oil prices from the brink of slipping into the teens.
Sitton is one of three members of the TRC, and by way of Twitter, he said that he had a “really substantial, really exciting call” with Russia’s energy minister Alexander Novak, as he also texted Saudi Arabia’s oil head Prince Abdulaziz bin Salman al-Saud.
The exchanges between oil players from the U.S. to Russia come after President Donald Trump waded into the Saudi-Russia price war with a tweet, suggesting that he could broker a deal between the world’s biggest oil producers and curb a crash of oil.
It is unclear what part the U.S. will play in the dealings, though many expect any pact to include at least some concessions that U.S. oil shale producers will reduce their oil output.
A meeting of the Organization of the Petroleum Exporting Countries and its allies, which will include Russia and possibly the U.S. on Monday, will be closely watched inside and outside the world of energy giants.
Sitton made it clear that he’s not looking to juice prices but rather, aiming to avert certain economic disaster for oil-and-gas companies under the TRC’s watch.
Asked if he would be comfortable with oil prices at $42 a barrel. Sitton said his expectations were much more muted than that.
“I’ll tell you this, I actually think, to be very blunt, that’s high for now,” he told CNBC. He said that there are levels at which the U.S. producer “can sustain, can operate,” acknowledging that it won’t be comfortable if crude prices don’t return to recent peaks at around $60 a barrel.
It “won’t be comfortable but will keep the massive about of bankruptcies from going on,” he said.
His comments come as May West Texas Intermediate oil CL.1, +13.23%, the U.S. benchmark, rose $3.02, or 11.9%, to settle at $28.34 a barrel on the New York Mercantile Exchange. Prices for the front-month contract climbed about 31.8% for the week, according to FactSet data.
Meanwhile, the Dow Jones Industrial Average DJIA, -1.68%, the S&P 500 index SPX, -1.51% and the Nasdaq Composite Index COMP, -1.52% are trading lower as investors contend with the prospect of an outbreak of COVID-19 that will last far longer than investors hope. The disease has already been contracted by more than 1 million people world-wide, punishing expectations for oil and stocks.
Check out the full Sitton video below:
