Oil prices “rolled back” by 1% due to technical purchases, but the market is generally falling
6 May 08:34
Oil prices rose by 1% on Tuesday as traders took advantage of yesterday’s drop in prices to make new purchases. Nevertheless, OPEC’s decision to increase production continues to raise concerns about an oversupply of oil on the market, "Komersant Ukrainian" reports citing Reuters.
According to OilPrice.com, futures for Brent crude rose 96 cents to $61.19 per barrel as of 08:25 Kyiv time, while US West Texas Intermediate added 90 cents to $58.03 per barrel.
Both benchmark crude oils ended Monday’s trading at their lowest level since February 2021 due to OPEC’s decision to accelerate oil production increases for the second month in a row.
“Today’s slight recovery in oil prices is more technical than fundamental. Ongoing unfavorable factors, including fundamental changes in OPEC’s production strategy, uncertain demand due to the risks of US tariffs and lower forecasts, continue to weigh on overall price dynamics,”
– said Yeap Jun Rong, market strategist at IG.
Due to expectations of production exceeding consumption, oil has lost more than 10% in six consecutive sessions and is down more than 20% since April, when US President Donald Trump’ s tariff shocks caused bets on a global economic slowdown to rise.
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China and the US supported prices
The return of Chinese market participants after a five-day public holiday that began on May 1 helped support prices on Tuesday.
“China also resumed work today, and being the largest importer, buyers probably rushed to secure oil at the current low prices,”
– said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Further support was provided by data showing growth in the service sector in the US, the world’s top oil consumer, as orders increased.
The Institute for Supply Management (ISM) reported on Monday that its non-manufacturing purchasing managers’ index (PMI) rose to 51.6 last month from 50.8 in March. Economists polled by Reuters had forecast a decline in the services PMI to 50.2.
The US Federal Reserve is likely to leave interest rates unchanged on Wednesday as tariffs weigh on the economic outlook.
Forecast
Barclays on Monday cut its Brent crude forecast by $4 to $70 a barrel for 2025 and set its 2026 estimate at $62 a barrel, citing a “challenging path for fundamentals” amid escalating trade tensions and a shift in OPEC’s production strategy.
