Risk markets have grown used to brutal Monday opens for oil and are probably desensitized to the constant selling pressure as extraordinary global monetary and fiscal support is papering over a worldwide demand shock for now. A supply glut needs to be corrected by deeper cuts, something monetary or fiscal policy can't do right now.
Caution gripped Asian share markets out of the gates amid expectations for a busy week of corporate earnings reports, and economic data will drive home the damage done by the global virus lockdown. But things calmed after the expected PBoC rate cut.
However, Japan reported its exports fell almost 12% in March from a year earlier, with shipments to the United States down over 16%. That data drove home Asia's worst exporter fears that there's no export consumption just yet to support an economic recovery.
The S&P 500 Futures held up well despite a shaky start to the Asia session. Now traders in London are focusing on the divergence between European and US equities that continued with another 2% in SPX's favor last week. Europe needs to unite and offer a coordinated policy response; on that front, there is some glimmer of optimism the EU Heads of State meeting on Thursday.
European equities look set to open in the green after the shares markets put in mixed session in Asia as the barrage of oil headlines likely offset policy easing out of China.
May WTI contract expires tomorrow. The June contract is trading at just under $24/bbl, which is still a massive discount to Brent in percentage terms, but not as dramatic as the current contract suggests. More generally, WTI (and US crude) is far more affected by storage logistics issues than Brent, which is causing a huge impact on front date pricing into the settlement.
Regardless of what OPEC does, there will be structural demand loss for oil due to less travel. At a minimum, oil prices will be the last asset class to recover from lockdown. End transport demand will only occur in the final stages of reopening when border crossing is allowed, and travel restrictions get lifted. People will then flock again to planes, trains, and automobiles.