U.S. WTI futures were down 9.09 percent as of 1:24 p.m. HKSIN to $15.40 per barrel and Brent crude futures were down 2.75 percent to $20.85 per barrel even as talks resumed in most countries about when and how to reopen their economies, a move which should, and could, increase demand for oil. The oil markets have been struggling for several weeks, since the deal for production cuts between OPEC and Russia crumbled in March, and both Russia and Saudi Arabia quickly ramped up production and slashed their prices, causing global oil storage facilities to reach near capacity.
Despite a commitment from both oil producing countries to cut production by 9.7 million barrels per day starting in May, analysts believe that the expected cuts may not be enough, and that oil can potentially head into negative territory for a second time. The problem of oil's oversupply is not just that storage is near capacity, it's that with prices so low, there is little incentive for selling – instead, many companies may opt to wait for prices to rise before they try to dump their inventory. CNBC analysts forecast that global storage may reach 100% capacity sometime within two weeks and two months from now. Though some creative solutions may be found, the problem is unlikely to be resolved any time in the near future which could keep oil prices on their downward trajectory.
Stock Market Swings Set to Continue
The oil markets aren't the only ones that have seen intense volatility in recent weeks. Stock traders have alternately rejoiced and despaired as the markets have fluctuated wildly since the start of the coronavirus pandemic. Stock futures are pointing to a higher open on Wall Street on Monday after a higher close for all three benchmarks on Friday. Despite steep losses, the S&P 500 is down only 16 percent from its all-time high and it's up 29 percent from the low hit one month ago. These 'tempered losses' are somewhat astounding considering the alarming unemployment rate in the U.S. which has seen some 26 million people lose their jobs in the past few weeks.
Some analysts question why the steep rise in unemployment hasn't come with a corresponding drop in stock prices, and whether the stock markets are simply experiencing a delayed reaction to the pandemic. Other analysts argue not to look for reasons to be skeptical, but to embrace the relative stability of the S&P 500 in these turbulent times.
Asian markets were broadly higher on Monday, with Japan's Nikkei 225 enjoying the steepest gains, even as the Bank of Japan warned of difficult economic times ahead and introduced new stimulus measures for the second consecutive month. The index was up 2.73 percent in the early afternoon in Asia. Hong Kong's Hang Seng Index jumped 1.88 percent, and South Korea's Kospi was up 1.94 percent. Both of China's benchmark indexes were also higher.
On the currency markets, the dollar edged lower, with the greenback falling 0.205 against the yen to 107.28. The dollar also eased against its other trading partners: the British pound gained 0.55 percent against the greenback, to trade at $1.244, while the euro was up 0.22 percent to $1.084.