Oil prices are on track for their most significant monthly loss in April, driven by concerns over the impact of the US-led trade war on global economic growth and energy demand. At the same time, the OPEC+ alliance has been loosening its supply restrictions, further exacerbating the pressure on crude prices.
Brent crude, the global benchmark, saw a decline toward $63 per barrel on Wednesday, marking a 15% drop for the month—the steepest monthly loss since the contract’s inception in 1988. Meanwhile, West Texas Intermediate (WTI) prices have slipped back into the upper $50s.
As one of the world’s most important industrial commodities, crude oil frequently experiences significant price fluctuations. For context, during April 2020, amid the COVID-19 pandemic, WTI even briefly traded in negative territory. However, despite the severity of that crisis, Brent ultimately finished the month in positive territory, and WTI’s overall performance for April 2020 was not as drastic as the current downturn.
On Wednesday, data was expected to reveal a slowdown in US economic growth, adding to the bearish sentiment in the market. Earlier figures showed a sharp drop in consumer confidence, plunging to its lowest level in almost five years. Meanwhile, China’s factory activity contracted to its worst level since December 2023, underscoring the early effects of the ongoing trade conflict.
Crude prices have taken a hit this month, reaching a four-year low, as US President Donald Trump’s trade tariffs—particularly on China, the world’s largest oil importer—have dampened expectations for energy demand. On the supply side, OPEC+ has been gradually relaxing its production cuts, and JPMorgan Chase & Co. has warned that the cartel may accelerate its planned output increases at an upcoming meeting next week.
“I’ve been saying that Brent was likely heading back to a $60 to $65 range over the past few weeks,” said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp. He attributed this outlook to both OPEC+ supply policies and the potential for increased oil flows from Kazakhstan. “The next six to eight weeks should see rising supply and growing inventories.”
In the US, commercial crude stockpiles surged by 3.8 million barrels last week, according to an estimate from the American Petroleum Institute. There was also a modest increase in stocks at the critical Cushing, Oklahoma hub. Official data on US crude inventories is expected later on Wednesday.
Trump, in an interview with ABC News, reiterated his belief that China deserved the heavy tariffs placed on its exports, though he also asserted that US consumers would not face significant hardships. He acknowledged, however, that his 145% tariffs on many Chinese goods amounted to a de facto embargo.
The crude market was jolted earlier this month when OPEC+ made a surprise announcement to raise output by 411,000 barrels per day starting in May—three times the amount originally planned. The group’s meeting on May 5 will aim to finalize the production increase for June, adding further uncertainty to the market.
Vivek Dhar, an analyst at Commonwealth Bank of Australia, noted that OPEC+’s supply policy represents “perhaps the most significant risk to oil prices.” He added that market participants are justifiably concerned that the group could once again exceed planned supply increases.
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