Oil prices nosed up Tuesday while in anticipation that the United States will reach a deal on a $2 trillion coronavirus aid package that could cushion the economic impact of the outbreak and in turn support oil demand.
The slight push-up of prices in the global market equally is supported by the expectation the oil feud between Russia and Saudi Arabia would be resolved to settle the required cuts.
Brent crude gained 2.49% to trade at $30.07 per barrel while West Texas Intermediate crude gained 0.06 to trade at $23.43 per barrel.
Meanwhile and In the midst of the rises, Bonny light actually lost 9.47% to trade at 23.66 Monday.
Still, the global crude oil demand outlook remains low since the aviation industry groan under travel restrictions put in place by governments to curtail commercial activities to prevent the further coronavirus spread.
“Prices and profit margins for motor and aviation fuels globally are under severe pressure from a plunge in demand as countries enforce lockdowns and airlines ground planes, forcing more refineries to reduce output and lower their crude oil demand”; reported Market Screener.
In a bid to release the pressure on its economy caused by the coronavirus pandemic, the Nigerian government slashed its official crude selling prices to woo buyers as a necessary measure to clear a glut of unsold April-loading cargoes before releasing the May programme on Monday
The Nigerian National Petroleum Corporation cut its April official selling prices for Bonny Light and Qua Iboe by $5 per barrel to dated Brent minus $3.29 and minus $3.10 per barrel, respectively, Reuters reported on Monday.
May loading programmes emerged with key grades seeing an increase over the previous month, Reuters reported on Monday.
Bonny Light and Forcados are both higher and due to load 245,000 barrels per day, Bonga 123,000 bpd and Qua Iboe 215,000 bpd.
There will also be two cargoes each of Usan and Yoho, five cargoes each of Brass River and Agbami, six of Egina and four Amenam, according to the report.
The Group Managing Director of the Nigerian National Petroleum Corporation, Mallam Mele Kyari, said recently that the country was already struggling to find buyers for its crude oil, saying over 50 cargoes were yet to be sold.
The hope of bounce back of global oil demand is beginning to go deem as new wave of covid-19 cases begins to rise in China caused by a jump in infected travelers returning home from overseas. That is raising the risk of transmissions in Chinese cities and provinces that had seen no new infections in recent days.
In the wake of this deeming economic anticipation in the world’s biggest oil importer, major oil dealers have begun to cut spending preparing for deeper slump in prices.
Royal Dutch Shell said on Monday that it would cut spending by 20 percent, or about $5 billion, and also suspend its share buyback plan. French oil giant Total SA and Norway’s Equinor announced similar moves.
ExxonMobil and Chevron have suggested they too would be axing their budgets, with Exxon under particular pressure. Goldman Sachs estimates that Chevron needs $50 per barrel in order to cover spending and its dividend. ExxonMobil, on the other hand, needs something like $70.
Seplat Petroleum Development Company Plc, is looking to cut costs by at least 30 per cent to counter a crash in crude prices, its Chief Financial Officer, Roger Brown, has said.
No one knows how long this economic ‘setting back’ would last with its effect on crude demand. Until the aviation industry bounces back, lock-downs are relaxed and factories open up for production, oil producers and dealers have a hard time to deal with.