Oil extended a rebound Wednesday from its biggest crash in a generation as the prospect of U.S. stimulus to shield against the fallout from the coronavirus tempered fears over an unprecedented supply-demand shock.
Brent crude rose around 3% to $38:50 a barrel in in London early trading and has now recouped almost half of Monday’s collapse.
However for Africa’s largest economy, the oil price crash has led to panic buying of the greenback with Nigerian banks quoting the dollar at N390 Tuesday with the government of President Muhammadu Buhari yet to unfold a coherent response to the crisis.
It is expected the local currency will come under more pressure at the black market when trading opens Wednesday.
Oil the mainstay of Nigeria’s economy collapsed Monday after Saudi Arabia upped the ante in its oil price war with Russia, pledging to supply a record 12.3 million barrels a day next month in a massive increase to flood the market.
Moscow responded within minutes, with Energy Minister Alexander Novak saying Russia had the ability to boost production by 500,000 barrels a day.
The Trump administration’s willingness to revive the economy comes after the disintegration of OPEC+ and subsequent plunge in oil prices threatened the U.S. shale industry and spurred an indiscriminate sell-off in markets already reeling from the coronavirus.
However, investor hopes were tempered when the president didn’t appear at a White House briefing Tuesday after promising a day earlier he’d hold a news conference to announce major stimulus