Oil price benchmarks suffered further deterioration as the COVID-19 instigated assault weighed heavily on global markets. Oil prices slumped yet again on Thursday, for the fifth straight day to their lowest since January 2019. The coronavirus epidemic's sporadic global outbreak has intensified fears of a pandemic that will lead to a significant economic downturn and a collapse in the call for crude oil
On thursday WTI was trading at $46.52 a down 4.54% or $2.21 on previous session whilst Dated Brent traded on the ICE at $50.64, down 4.11% and close to BREACHING the $50.50 resistance point.
The fundamentals endorsed by the fact that For the first time since the start of the coronavirus outbreak, it is reported by the World Health Organisation that, the number of new infections outside China exceed those within.
An anticipated reduction in demand for transport fuels and the fear of economic slowdown in large economies such as Japan, South Korea and Italy, countries that have been infected by COVID-19 have underpinned the slump in oil prices in a market that was already oversupplied.
Not even the bullish numbers emanating from the EIA could buoy the market. U.S. crude oil stockpiles increased by 452,000 barrels to 443.3 million barrels, the EIA report showed. This was less than the 2-million barrel rise analysts had expected. Energy futures have also taken a huge wallop as investors sell of stocks and flee the sector.
The market will now wait to see how OPEC+ will react to prices that are essentially in free fall. Russia has been reluctant to cut production as every time they do US Shale benefits. It has also been also problematic determining whether COVID-19 is just a Q1 event. It is difficult to see if it sojourns beyond Q2 how US Shale can continue to exist with WTI price action below $46 over that term.
The Nigerian oil Minister, Timi Sylva recently confirmed that Nigeria were prepared to do whatever it took to balance the market and boost oil prices. The real dilemma however is Nigeria's budget is based on a barrel price of $60 but also producing 2 million barrels per day