Did crude oil prices go to zero?

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A few days ago, crude oil markets around the world went into a frenzy when crude oil prices turned negative. We can view this from the chart below.

It was the first time ever that the price on a futures contract from oil had gone negative.

What Happened?

A futures contract simply means an agreement to buy something at a specified price, but deliver and pay later.

With no place to store the crude and contracts on their hand, what would they do? Sell the contract right?

But to who?

Storage capacity and demand are scarce at the moment. The only way to get rid of the contract was to sell in the negative. This means producers paid buyers to take the product from them

Is Nigeria Affected?

Brent which is the benchmark for Nigeria’s crude is positive, even though it’s weak at $20. However, the two issues of low demand and surplus supply means prices could remain low for the immediate future.

That means low revenue for the government, and pressure on the exchange rate could increase.

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