Oil prices continue to fall: the largest monthly decline in three years
30 April 09:35
Oil prices continued to decline on Wednesday and are approaching their biggest monthly drop in more than three years. The global trade war has worsened the outlook for fuel demand, and fears of an increase in supply are also weighing on the market, "Komersant Ukrainian" reports citing Reuters.
According to OilPrice.com, futures for Brent crude oil fell 79 cents, or 1.23%, to $63.46 per barrel as of 07:40 Kyiv time. Futures for US West Texas Intermediate (WTI) crude oil fell 77 cents, or 1.27%, to $59.65 per barrel.
Brent and WTI have lost 15% and 16% of their value, respectively, this month, the largest percentage drop since November 2021.
Читайте нас у Telegram: головні новини коротко
Trade wars and recession expectations
Both benchmark crude oil grades fell sharply 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 when China retaliated with its own tariffs on US imports, igniting a trade war between the two largest oil consuming countries.
According to a Reuters poll, Trump’s tariffs on US imports have made it likely that the global economy will slip into recession this year.
Survey data released on Wednesday showed that manufacturing activity in China contracted at the fastest pace in 16 months in April.
Daniel Hynes, senior commodity strategist at ANZ Bank, noted that concerns about demand amid the trade war have affected investor sentiment.
“There are also concerns that the recent strengthening of US economic data was only temporary, due to inventory build-up ahead of the tariffs, which now appears to be easing,” he said,
– he said.
Data released on Tuesday showed that US consumer confidence fell to a near five-year low in April due to rising concerns about tariffs.
Recent signs of de-escalation in the trade wars, including a pair of executive orders signed by Trump on Tuesday to mitigate the impact 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 control inflation.
The amount of oil on the market is increasing
Oil prices were also affected by fears of increased supply from OPEC. Several members of the organization will propose to increase production for the second consecutive month in June, sources told Reuters last week. The group will meet on May 5 to discuss production plans.
On the supply side, U.S. crude oil inventories rose by 3.8 million barrels last week, market sources said Tuesday, citing data from the American Petroleum Institute. Analysts polled by Reuters, on average, expect a 400,000 barrel increase in US crude oil stocks over the past week.
ANALYSIS
