Skip to main content

Oil price plunges below $5 as coronavirus hits global economy

Oil prices have plunged further below $5 a barrel with the threat to erase decade of demand growth with thousands of jobs under threat as coronavirus continues to spread further.

A Bloomberg report revealed that industrial and economic activity is grinding to a halt as governments around the globe extend shutdowns due to the swift spread of the coronavirus.

Oil has faced its own knock-on effects with a market massively oversupplied and nowhere to put physical barrels of crude.

An unprecedented output deal by OPEC and allied members a week ago to curb supply is proving too little too late in the face a one-third collapse in global demand.

On Monday, a technical oddity exacerbated the price plunge as traders fled the May futures contract ahead of its expiration today, driving it down as much as 78 per cent to the lowest level since futures began trading in New York in 1983. The following month’s contract fell 11 per cent to $22.22 a barrel. CME Group said it’s possible that May WTI contract could trade negative.
“There is little to prevent the physical market from the further acute downside path over the near term,” said Michael Tran, managing director of global energy strategy at RBC Capital Markets. “Refiners are rejecting barrels at a historic pace and with U.S. storage levels sprinting to the brim, market forces will inflict further pain until either we hit rock bottom, or COVID clears, whichever comes first, but it looks like the former.”

Since the start of the year, oil prices have fallen by more than 90 per cent after the compounding impacts of the coronavirus and a breakdown in the original OPEC+ agreement. With no end in sight, and producers around the world continuing to pump, that’s causing a fire-sale among traders who don’t have access to storage.

There are signs of weakness everywhere. Buyers in Texas are offering as little as $2 a barrel for some oil streams, raising the possibility that producers may soon have to pay to have crude taken off their hands. The spread between the nearest two contracts for the U.S. benchmark has fallen to its weakest level on record. In Asia, bankers are increasingly reluctant to give commodity traders the credit to survive as lenders grow ever more fearful about the risk of a catastrophic default.

Comments

Post a Comment

Popular posts from this blog

Kenyan Law Court dismisses case of man seeking compensation after his wife eloped with another man from hospital

  A lawsuit filed by a man seeking to be compensated by St Mary's Mission Hospital in Kenya for allowing his wife to leave the hospital with another man after giving birth, has been struck out by a law court.    The appellant had sued the St. Mary's Mission hospital at Kakamega law courts in 2020 seeking general damages from the facility on grounds that the hospital had discharged his wife and allowed her to leave with another man. After delivering and at the time of discharge, the wife of the appellant claimed he was the baby's father.   The court of appeal judges Patrick Kiage, Mumbi Ngugi and Francis Tuiyott sitting at the Kisumu Court of Appeal, empathized with the man, but disagreed that he (the appellant) be compensated by the hospital for not detaining his wife.  They upheld the lower court's judgement which added that there's no remedy that lies in the law for such grievances.   Kiage said;   "I agree that if a man takes the woman he loves to t...
Post a Comment
Read more

CJN Tanko unveils panel to hear Atiku’s appeal against Buhari

The Chief Justice of Nigeria, Ibrahim Tanko Mohammed is presiding over the 7-man panel that will hear the appeals filed by the People’s Democratic Party (PDP) and its presidential candidate, Atiku Abubakar, challenging the victory of President Muhammadu Buhari at the February 23 poll. Other members of the panel are Bode Rhodes-Vivour, Amiru Sanusi, Uwani Abaji, Ejembi Eko, John Inyang Okoro and Olukayode Ariwoola. Atiku and his party are challenging the September 11 judgment of the Justice Mohammed Garba-led Presidential Election Petitions Tribunal which affirmed President Buhari’s victory at the polls. The appeals hearing has generated some controversies especially due to the silence of the Supreme Court on the justices that would constitute the panel, with the Coalition of United Progressives Party (CUPP) demanding the use of seniority in selecting them. A senior member of Atiku’s legal team, Chief Chris Uche (SAN), told reporters that they considered it strange that as at ...
Post a Comment
Read more

FRSC reinforces directive on use of google maps while driving

The Federal Road Safety Corps (FRSC) has clarified its position on the use of Google Maps, The FCT Sector Commander of the Federal Road Safety Corps (FRSC), Ayuba Gora was quoted saying that driving with the aid of Google map using mobile phones is a serious traffic offence. Gora said this at the inauguration of the 2019 Ember Months Campaign by Lugbe Unit Command of the FRSC in Abuja yesterday. But, FRSC Spokesman Bisi Kazeem making reference to Gora’s comments said the Sector Commander was quoted out of context and his statement outrightly misrepresented. Kazeem said the FRSC as a technology-driven organisation is not and has never stood against the use of Google Maps by Motorists. The statement read: “To state the obvious, we have always enlightened the public on the position of the law on the use of phone while driving. “The statement he made during the flag off buttresses the position of the Corps, which is that any driver who intends to deploy the use of Google Map...
Post a Comment
Read more