Oil prices rally after two days of price plunge as Nigerian cargoes fail to find buyers

Oil prices showed some signs of recovery Wednesday morning as US oil futures jumped by over 20% and Brent eased after falling for two days as markets across the globe grapple with oil glut amidst the COVID-19 crisis.

US crude futures, after sliding into the negative territory for the first time in history, leapt by 20% as contracts for May delivery expired and the June contract emerged as the front month.

As of 01.34 West African Time, West Texas Intermediate CLc1 had gone up by $2.05 or 18% at $13.62 per barrel.

Brent, the benchmark for Nigeria’s crude grades, rose by 4 cents at $19.37 per barrel after going up by over $1 earlier.

“Global markets are struggling mightily with a temporary but overwhelming demand drop due to the coronavirus pandemic,” Stephen Innes, global markets strategist at AxiCorp told Reuters, warning that prices could still tumble as storage fills up.

Oil prices have plummeted by more than 70% year to date as the coronavirus has crashed demand for jet fuel and gasoline just as the storage tanks all over the world are swiftly filling up.

Read also: Nigeria’s inflation rate rises to 12.26% in March, highest in 23 months

The volatile market situation has impelled CME Group, the largest commodities exchange in the world, to increase margins on oil futures.

At least three dozen cargoes of April and May-loading Nigerian crude, which are unlikely to be absorbed by the refining systems of oil majors, were struggling to find buyers ahead of the imminent arrival of June programmes as spot trade grew slim on Tuesday, Reuters said.

Meanwhile, Nigeria’s closest oil-producing rival in Africa, Angola traded its last cargo of Cabinda crude last week.

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