When it came it was as abrupt as it was devastating, a collapse in crude oil price futures significant enough to be defined as a material adverse change. In other words a calamity, at a time Nigeria is least able to absorb it.
Hedge fund managers unwound bets that crude will fall at the fastest pace in 16 months as the prospects for a trade war truce and a slowdown in shale drilling helped futures rebound.
It now seems that the massive Hedge undertaken by Occidental Petroleum Corp (OXY.N) and reported as “costless”
Vitol is the largest global independent trader of crude oil and refined petroleum products.
This is no time for OPEC+ to cut production and if I were in charge I would maintain production levels as they currently stand.
There is reason for Nigerians to worry and it is not only the arrival of COVID-19. Oil price benchmarks are in freefall, crashing through resistance levels as if they were none existent. This week has seen Oil fall to its lowest price levels since July 2017 and barring a miraculous cure for the COVID-19, it is difficult to see what an OPEC+ are able to do to arrest this downward spiral. We may see Brent below $45 as Libya gets back on stream.
The meeting in Vienna among the signatories of the JCPOA minus the US was conceived as the last best chance to save the historic accord. Many commentators thought it lacked the authority to provide a definitive outcome, not least because of the relatively junior level of delegations attending.
