Oil prices are falling, preparing for the biggest monthly drop in three years
Kyiv • UNN
Oil prices continue to decline, heading for their biggest monthly drop in more than three years. The reasons are the trade war and fears about increasing supply.
Oil prices continued to fall on Wednesday and were heading for their biggest monthly drop in more than three years, as the global trade war undermined the outlook for fuel demand, while concerns about rising supply also put pressure, Reuters reports, UNN writes.
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Brent crude futures fell 72 cents, or 1.12%, to $63.53 a barrel by 04:04 GMT (07:04 Kyiv time). West Texas Intermediate crude futures fell 70 cents, or 1.16%, to $59.71 a barrel.
Brent and WTI have lost 15% and 16% respectively since the beginning of this month, the biggest percentage drop since November 2021.
Both benchmarks fell in price after US President Donald Trump announced on April 2 that he would impose tariffs on all US imports. They then fell further to four-year lows as China responded with its own tariffs on imports from the US, fueling a trade war between the two largest oil-consuming countries.
According to a Reuters poll, Trump's tariffs on US imports have made it possible for the global economy to slide into recession this year.
China's manufacturing activity contracted at its fastest pace in 16 months in April, a study showed on Wednesday.
Concerns about demand amid the trade war have affected investor sentiment, said ANZ Bank Senior Commodity Strategist Daniel Hynes. "There are also concerns that the recent strengthening of US economic data was only temporary due to stockpiling ahead of tariffs, which now appear to be weakening," he added.
US consumer confidence fell to a nearly five-year low in April due to growing concerns about tariffs, data showed on Tuesday.
Recent signs of de-escalation of trade wars, including several orders signed by Trump on Tuesday to cushion the blow of his auto tariffs, have somewhat reassured global investors.
However, analysts believe that the oil market will remain under pressure as the Trump administration continues to prioritize lower oil prices to manage inflation.
Oil prices have also been undermined by concerns about increased supply from the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+. Several OPEC+ members will propose to increase production for the second consecutive month in June, it was reported last week. The group will meet on May 5 to discuss production plans.
Regarding supplies, US crude oil inventories rose by 3.8 million barrels last week, market sources said on Tuesday, citing data from the American Petroleum Institute. US government inventory data is due to be released on Wednesday. Analysts surveyed by Reuters expect US crude oil inventories to rise by an average of 400,000 barrels in the past week.