Oil prices plunge amidst crude surplus, fear of coronavirus second wave

Oil prices slid by more than 1% Monday morning on account of saturation in the global crude market and worries that the easing of lockdowns in countries might spur a fresh wave of the coronavirus outbreak in some parts of Asia.

Brent, Nigeria’s oil grades benchmark, was trading at $30.46 per barrel, 51 cents or 1.7% lower than its price at the previous session, as of 07:24 West African Time.

U.S. West Texas Intermediate had shed 49 cents or 2%, selling for $24.25 about the same time.

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The two benchmarks have posted moderate gains in the last two weeks on the back of loosening restrictions imposed to contain the spread of COVID-19.

However, energy investors are nursing fear about the implications that the speculation about a new round of coronavirus infections in northeast China and South Korea might have for business.

“That’s definitely a cause for concern as the last thing people want is for lockdowns to happen again across multiple cities, but I think authorities should be much more prepared right now to cope with a second wave,” OCBC economist, Howie Lee, told Reuters.

“Overall, the risk environment looks quite conducive for further upside,” he added, noting that Brent could stabilise at $30 per barrel for some time.

Around the world, demand has fallen by around 30% as the pandemic hindered free movement, causing oil storage to build up rapidly.

Bonny Light, Nigeria’s premium oil grade, added up 10.16% at the last session to close at $24.93 per barrel.

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