Oil Prices Tumble, Set for Largest Monthly Drop Since 2021

LONDON: Oil prices continued to fall on Wednesday, poised for their biggest monthly decrease in nearly three and a half years as the international trade conflict diminished expectations for fuel demand, with apprehensions about rising supply also impacting the market. Brent crude futures decreased by $1.13, or 1.8 per cent, reaching $63.12 per barrel as of 0813 GMT. U.S. West Texas Intermediate crude oil futures fell by $1.11, or 1.8 per cent, reaching $59.31 per barrel. Up to now this month, Brent and WTI have fallen by 15.4 per cent and 17 per cent, respectively, marking the largest percentage declines since November 2021.

Both indices declined following U.S. President Donald Trump's April 2 declaration of tariffs on all U.S. imports. They subsequently dropped to four-year lows as China imposed tariffs, fueling a trade war between the two leading oil-consuming countries. According to a Reuters poll, Trump's tariffs have increased the likelihood that the global economy will enter a recession this year. A factory survey revealed that China's manufacturing activity declined at its quickest rate in 16 months in April, as reported on Wednesday. Consumer confidence in the U.S. fell to its lowest level in nearly five years in April, highlighting increasing worries about tariffs, according to data released on Tuesday.

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Although the orders Trump signed on Tuesday to mitigate the impact of auto tariffs calmed some investor anxieties, oil prices were additionally pressured by worries about increasing supply from OPEC+. Multiple OPEC+ nations are expected to propose increasing production for the second consecutive month in June, sources informed Reuters last week. The team is scheduled to gather on May 5 to go over production plans.

"PVM analysts stated that the tangible chance of OPEC+ adding more barrels to the market to maintain order within its group, combined with diplomatic efforts in Ukraine and Iran, could lead to increased international crude supply when a trade war dampens any prospects for demand growth." Additionally, reflecting bearish indicators on the supply front, U.S. crude oil stocks increased by 3.8 million barrels last week, according to market sources referencing data from the American Petroleum Institute. Data from the U.S. government is expected at 10:30 a.m. ET (1430 GMT). Analysts surveyed by Reuters anticipate an average rise of 400,000 barrels in U.S. crude oil reserves