Oil Slides on Demand Uncertainty, Faces Worst Month Since 2021
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Crude oil prices extended their decline on Wednesday, positioning both Brent and WTI for their steepest monthly drop in over three years. Weighed down by weakening macroeconomic indicators, escalating trade tensions, and growing fears of oversupply, the market is grappling with deteriorating fundamentals heading into the OPEC+ meeting scheduled for May 5.
Brent crude futures (BRN1!) fell $0.75 or 1.17% to $63.50/bbl by 06:41 GMT, while WTI (CL1!) declined $0.79 or 1.31% to $59.63/bbl. Both contracts are now trading at their lowest levels in more than two weeks, marking the third consecutive session of losses. On a monthly basis, Brent has shed 15% and WTI 17%, representing the most severe drawdown since November 2021.
The sell-off has been primarily triggered by intensifying fears of a global recession, exacerbated by U.S. President Donald Trump’s decision on April 2 to impose sweeping tariffs on all imports into the United States. China's retaliatory measures further amplified downside pressure, creating a risk-off environment across energy markets. As the world’s two largest oil consumers move deeper into a protectionist stance, the demand outlook has deteriorated significantly.
April manufacturing data from China showed the sharpest contraction in factory activity in 16 months, reflecting early signs of the impact from U.S. tariffs. ANZ senior commodity strategist Daniel Hynes noted that recent strength in U.S. data may have been artificially bolstered by pre-tariff stockpiling, a trend now reversing. U.S. consumer confidence in April slumped to its lowest level in nearly five years, adding to the bearish sentiment.
Despite minor easing signals—such as Trump’s recent executive orders softening auto-related tariffs—analysts remain skeptical that this will materially alter the medium-term demand trajectory. The Trump administration’s strong preference for lower energy prices as a tool to curb inflation suggests little appetite for policies that might lift crude benchmarks.
On the supply side, concerns are growing that OPEC+ may opt to increase production further. Several member states are reportedly advocating for an extension of the current output hike cycle into June. The group will convene on May 5 to finalize its production strategy, with additional barrels potentially weighing further on the market unless demand conditions stabilize.
Meanwhile, preliminary data from the American Petroleum Institute showed a 3.8 million barrel increase in U.S. crude inventories last week. Official figures from the Energy Information Administration are due at 14:30 GMT today, with a consensus forecast pointing to a more modest build of 400,000 barrels.
In summary, the crude complex remains under dual pressure from weakening macroeconomic indicators and a structurally fragile supply-demand balance. Unless the upcoming OPEC+ meeting surprises with restraint or global trade risks de-escalate meaningfully, crude oil prices are likely to remain in a bearish posture in the near term.
Brent crude futures (BRN1!) fell $0.75 or 1.17% to $63.50/bbl by 06:41 GMT, while WTI (CL1!) declined $0.79 or 1.31% to $59.63/bbl. Both contracts are now trading at their lowest levels in more than two weeks, marking the third consecutive session of losses. On a monthly basis, Brent has shed 15% and WTI 17%, representing the most severe drawdown since November 2021.
The sell-off has been primarily triggered by intensifying fears of a global recession, exacerbated by U.S. President Donald Trump’s decision on April 2 to impose sweeping tariffs on all imports into the United States. China's retaliatory measures further amplified downside pressure, creating a risk-off environment across energy markets. As the world’s two largest oil consumers move deeper into a protectionist stance, the demand outlook has deteriorated significantly.
April manufacturing data from China showed the sharpest contraction in factory activity in 16 months, reflecting early signs of the impact from U.S. tariffs. ANZ senior commodity strategist Daniel Hynes noted that recent strength in U.S. data may have been artificially bolstered by pre-tariff stockpiling, a trend now reversing. U.S. consumer confidence in April slumped to its lowest level in nearly five years, adding to the bearish sentiment.
Despite minor easing signals—such as Trump’s recent executive orders softening auto-related tariffs—analysts remain skeptical that this will materially alter the medium-term demand trajectory. The Trump administration’s strong preference for lower energy prices as a tool to curb inflation suggests little appetite for policies that might lift crude benchmarks.
On the supply side, concerns are growing that OPEC+ may opt to increase production further. Several member states are reportedly advocating for an extension of the current output hike cycle into June. The group will convene on May 5 to finalize its production strategy, with additional barrels potentially weighing further on the market unless demand conditions stabilize.
Meanwhile, preliminary data from the American Petroleum Institute showed a 3.8 million barrel increase in U.S. crude inventories last week. Official figures from the Energy Information Administration are due at 14:30 GMT today, with a consensus forecast pointing to a more modest build of 400,000 barrels.
In summary, the crude complex remains under dual pressure from weakening macroeconomic indicators and a structurally fragile supply-demand balance. Unless the upcoming OPEC+ meeting surprises with restraint or global trade risks de-escalate meaningfully, crude oil prices are likely to remain in a bearish posture in the near term.