Yesterday’s trading saw the price of US oil turning negative for the first time in history. It ended at Negative $37.63 a barrel.
This development means that oil producers are paying buyers to take the commodity off their hands. The producers concern or fear is that their storage capacity could not take in more products by May, 2020.
The global lockdown has driven down the demand for oil as people are stocked inside and businesses on the halt.
Therefore, US Oil producers have resorted to renting tankers to store the surplus supply (more cost) and this literally forced the price of oil into negative territory.
Looking at from another angle, I felt that what they were pricing yesterday was the indirect cost of storing the excess crude produced not the crude itself that have zero demand.
LOCAL Solution: The Nigerian Govt should allow small businesses in Niger Delta to set up Modular Refineries to use the “unwanted” produced Crude oil to refine Products. Sales tax will be coming out of this and jobs to Nigerians, while we wait for any improvement in the global price.
