*As outbreak diminish demand
Nigeria’s premium grade of crude oil on Monday declined to $20 per barrel, bbl, even the fears that the global Coronavirus COVID-19, shutdown could last months and demand for fuel could evaporate further.
This is coming even as the Department of Petroleum Resources, DPR, ordered oil and gas companies to reduce their offshore workforce and move to 28-day staff rotations.
The DPR directive came as part of measures to curb the spread of the COVID-19, as a case on an offshore rig could spread quickly among workers and it has a potential impact on production.
According to DPR’s Director, Sarki Auwalu, Department of Petroleum Resources, said that only staff on essential duties would be allowed to travel to offshore or remote locations.
“Non-essential staff currently at offshore/remote locations should be withdrawn with immediate effect.”
Meanwhile, Bonny Light fell to 20.39 a barrel on Monday, from $21.51bbl recorded on Friday. Brent crude fell to $22.58 a barrel at one point on Monday, its lowest level since November 2002. U.S. West Texas Intermediate (WTI) crude fell 1.14 dollars or 5.3 per cent to 20.37 per cent.
Commenting on the price movement, UBS oil analyst Giovanni Staunovo, said: “The price of oil is now so low that it is becoming unprofitable to many oil firms to remain active, and higher-cost producers will have no choice, but to shut production, especially since storage capacities are almost full.
“Global oil demand is evaporating on the back of COVID-19-related travel restrictions and social distancing measures.
“in the near term, oil prices may need to trade lower into the cash cost curve to trigger production shut-ins to start to prevent tank tops to be reached.”
Also, Hussein Sayed, an analyst at FXTM, said: “This game of attrition is likely to drag prices even lower and even a price of 10 dollars per barrel is no longer unimaginable.”