Nigeria may be headed for the cliff as oil prices take a plunge despite efforts by oil producers to shore up prices in the spot market.
According to CBS News, oil prices fell below zero on Monday as demand for energy crumbled amid spiraling problems created by the coronavirus pandemic.
There are strong indications that traders are increasingly worried that they could end up with crude, with nowhere to stockpile the supplies.
All over the world economies are taking a big hit as markets jitter in panic.
The current global outlook is causing serious concerns even as Nigeria’s Central Bank rolls out fresh strategies that are intended to see the country through excruciating times.
Stocks slumped on Wall Street, with the S&P 500 down 1.8%, but the market’s most dramatic action was by far in oil, where benchmark U.S. crude for May delivery plummeted to negative $35.20, as of 2:30 pm. Eastern time.
It was nearly $60 at the start of the year, CBS News reports, before business-shutdown orders swept the world and idled factories, offices and automobiles.
In Nigeria, a stoppage of oil prospecting activities was  averted after PENGASSAN, a union of oil exploration engineers rolled back a plan to down tools in protest.
The union had been irked by the arrest and detention of oil workers by the Rivers State Government, following a face off linked to differences over the control of the Coronavirus.
Governor Nyesom Wike of Rivers State who hurriedly released oilmen under his custody revealed that he had been moved to review his government’s stance
Views are divided but many here say the action of the Rivers State Government was a direct attack on Nigeria’s economic interest, especially at a time of great national emergency.
Well placed sources in Abuja, Nigeria’s federal capital say a stiff reaction by the authorities was underway before Governor Wike pulled back from a path of confrontation
Much of the drop into negative territory was chalked up to technical reasons. CBS News reported.
The May delivery contract according to the news outlet is close to expiring, “so it was seeing less trading volume, which can exacerbate swings.” But prices for deliveries even further into the future, which were seeing larger trading volumes plunged, the report revealed.
Nigeria and other oil producing nations which constitute the oil cartel, OPEC, are seemingly in trouble as their projections reel in the face of the crushing pandemic.
The 10th (Extraordinary) OPEC and non-OPEC Ministerial Meeting which was held via videoconference, on Sunday, 12 April 2020, under the Chairmanship of HRH Prince Abdul Aziz Bin Salman, Saudi Arabia’s Minister of Energy, and co-Chair HE Alexander Novak, Minister of Energy of the Russian Federation had come up with new measures.
The meeting reaffirmed its resolve to abide with the Framework of the Declaration of Cooperation “signed on 10 December 2016 and further endorsed in subsequent meetings; as well as the Charter of Cooperation, signed on 2 July 2019.”
It also agreed to adjust downwards “their overall crude oil production by 9.7 mb/d, starting on 1 May 2020, for an initial period of two months that concludes on 30 June 2020.
“For the subsequent period of 6 months, from 1 July 2020 to 31 December 2020, the total adjustment agreed will be 7.7 mb/d. It will be followed by a 5.8 mb/d adjustment for a period of 16 months, from 1 January 2021 to 30 April 2022.
“The baseline for the calculation of the adjustments is the oil production of October 2018, except for the Kingdom of Saudi Arabia and The Russian Federation, both with the same baseline level of 11.0 mb/d. The agreement will be valid until 30 April 2022, however, the extension of this agreement will be reviewed during December 2021.”
Following the deterioration of oil prices as result of receding demand, experts warn that  facilities for storing crude are nearly full.
“The collapse, however, is mostly a reflection of traders rolling contracts to June as no one wants to take delivery because storage capacity is getting close to being reached,” noted Edward Moya, senior market analyst at OANDA, in a client note on Monday.
“An eye dropping discount of $12 between the May and June contracts reflect all the bearish supply and demand drivers that remain permanently in place”, he added.
Tanks could hit their limits within three weeks, according to Chris Midgley, head of analytics at S&P Global Platts.
Benchmark U.S. crude oil for June delivery, which shows a more “normal” price, fell 16.5% to $20.90 per barrel.
Big oil producers have announced cutbacks in production in hopes of better balancing supplies with demand, but many analysts say it’s not enough.
“Basically, bears are out for blood,” analyst Naeem Aslam of Avatrade said in a report.
“The steep fall in the price is because of the lack of sufficient demand and lack of storage place given the fact that the production cut has failed to address the supply glut.”