The week seems to be starting on a gloomy note for the global oil market, as the American headline crude, West Texas Intermediate (WTI), crashed by almost 25% due to the global economic crisis, and concerns over scarce storage capacity.
Information from oilprice.com shows that WTI crude slumped by almost 25% to sell at $12.81 per barrel of crude.
Nairametrics had earlier reported that the Brent crude crashed by about 8% to $19.70 per barrel as at 3.49 pm on Monday.
The US oil futures led price losses in the market, declining by more than $4 a barrel, based on the fear of storage getting to full capacity soon.
This problem is exacerbated by the economic crisis that is being faced globally, due to lockdown and restriction extensions by different countries, as part of ongoing measures to contain the spread of the coronavirus pandemic.
The June WTI contract’s price drop may have been caused by investors moving to the later months, after the May contract went into negative territory just before its expiry for the first time ever, last week.
The global economic output is expected to decline by 2% this year, while the demand will also decline by 29% due to the impact of the coronavirus pandemic.
Nigeria’s headline crude, Bonny light, is said to be selling slightly above $16 per barrel and even reported to be sold at a discount of $5 per barrel, thereby causing a serious revenue crisis in the country.
The oil market volatility has seen the Brent crude and WTI declined by 68% and 72% respectively, thereby leaving oil-producing firms fighting for survival.