The concluded OPEC+ oil supply agreement is similar in substance to that outlined on Thursday. According to the official statement, OPEC+ members will reduce production by 9.7 million barrels per day. However, the supply-side adjustment will probably be insufficient to bring balance to the oil market in the near term, since the estimated decline in global demand falls in the range of 20-30 million barrels a day. Furthermore, there are signs of disunity, which imply – in our view – that compliance might prove to be poor over time and thus reaching the point where the supply and demand balance could be further delayed.
Macro data from China this week may provide insights on the breadth and scope of the coronavirus’ economic impact, as 1Q20 datapoints (including GDP) will be released. Some high-frequency indicators in the US from March (e.g. retail sales, industrial production, etc.) could indicate the initial impact of the virus and the lockdown on the world’s largest economy. In addition, earnings season kicks off this week with US banks and financial firms reporting their results. These datapoints could provide markets reference points for economic and financial performance in a time of the global coronavirus pandemic.
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