A woman wearing a hazmat suit and googles pulls a grocery cart in the streets in Queens in New York City amid the coronavirus pandemic on April 20, 2020. Photo: Johannes Eisele / AFP

(ATF) Asian markets continued to slide after the plunge in oil prices smashed investor forecasts about the damage to global demand by the coronavirus pandemic.

“Global oil logistical capacity will be tested in extremis this month, as cargoes laden with oil arrive in ports that have no need for ready supply and few storage options to hold the crude until its needed,” Robert Ryan, Chief Commodity & Energy Strategist at BCA Research, said in an emailed response to Asia Times Financial.

“The most extreme testing of global logistics likely will occur in this month, as markets are forced to absorb the production surge from OPEC 2.0. In our updated forecast, we see Brent averaging $39/bbl this year – slightly above our earlier $35/bbl estimate – as incremental supply losses offset lower demand. As noted above, our forecast assumes the COVID-19 pandemic is contained and that fiscal and monetary stimulus re-energizes global growth.”

The global infections count now exceeds 2.5 million cases and a total of over 177,000 deaths, and the economic devastation continues to manifest itself in economic data and in the ongoing earnings season. Singapore reported more than 1,000 cases for a second day and will extend its partial lockdown for four more weeks.

“The extended circuit breaker means a bigger dent to GDP growth in the current quarter than we earlier thought and a prolonged recovery once the pandemic ends, whenever that is. We are cutting GDP growth forecast for 2Q20 to -6.8% YoY from -4.5% and for the full-year 2020 growth to -3.7% from -2.6% earlier,” ING economists said in a note.

Overnight, West Texas Intermediate oil futures expiring in May traded as low as -$16.74 a barrel before settling at $10.01. That put pressure on WTI crude contracts for June, which fell 33% to $13.59 a barrel. Brent crude slid 23% to $19.81.

This morning, WTI futures for June are slightly higher at $13.62 and Brent at $19.37.

Japan’s Nikkei 225 index is down 1.2%, the Australian S&P ASX 200 is off 0.33% and the Hong Kong benchmark, the Hang Seng index, has fallen 0.59%. China’s CSI 300 benchmark is flat. Overnight, the S&P 500 tumbled 3.07% and the Nasdaq Composite slid 3.48%.

Credit markets are also on the defensive although investment grade issuers are starting to make tentative plans for tapping the market. Xiaomi Corporation has received over $2 billion in orders after announcing price guidance on a 10-year dollar bond, Xinhu Zhongbao has issued price guidance for a two-year-11-month bond and Qingdao City Construction has issued price guidance for a three-year Reg S dollar bond. 

The Asian IG series 33 index is 6 wider at 124/128 bps with Indonesia being the under-performer, widening 15bps to 220/230 bps.

This story appeared first on Asia Times Financial