Nigeria’s premium grade, Bonny Light may continue to sell below $10 per barrel due to big discount on prices as oil demand continues to decline following a slump in global demand.
Oil recovered from a 21-year low, bucking two days of frenzied selling, but a global supply glut continues to loom over the market.
According to Bloomberg, Brent for June settlement fell to as low as $15.98 a barrel, the lowest since June 1999, before closing $1.04 higher at $20.37 per barrel. The Dated Brent benchmark, a global reference for almost two-thirds of the world’s physical flows, plunged to $13.24 a barrel on Tuesday, the lowest since 1999, according to price reporting service S&P Global Platts. But yesterday, it was assessed at $14.21 a barrel, Platts said.
“With the price so low, key European and African crude streams including Urals and Bonny Light will now sell under $10, as they trade at a discount to the marker,” it added.
Brent futures for June delivery closed five per cent higher after dropping as much as 17 per cent earlier on Wednesday. West Texas Intermediate crude also gained in New York, ending the day 19 per cent higher following an unprecedented plunge into negative territory on Monday.
News that U.S. President Donald Trump authorized the Navy to shoot down Iranian gunboats may have buoyed prices, but crude is not out of the woods yet, according to Robert Yawger, director of the futures division at Mizuho Securities USA. “It could potentially get worse because of the fact that storage is not all that far away from being full,” Yawger said.
Also what caused oil prices to recover some ground was because the US Congress looked on course to seal nearly $500 billion more in aid to help small businesses ride out the coronavirus crisis. WTI for June gained $2.21 to settle at $13.78 a barrel
The U.S. Energy Information Administration (EIA) in its weekly petroleum status report on April 22, 2020 showed that consumption of refined products has collapsed and oil producers have been slow to respond with corresponding production cuts, causing oil prices to fall sharply and even enter into negative pricing as traders look to unload oil they can’t find storage for.