Oil Prices on Verge of Steepest Drop in Three Years

By Siyi Liu

SINGAPORE (Romero.my.id) - Oil prices continued to fall on Wednesday and were poised for their biggest decline in over three years due to the global trade conflict undermining expectations for fuel consumption. Additionally, concerns about increasing supplies added pressure on the market.

By 0404 GMT, Brent crude futures declined by 72 cents, or 1.12%, to settle at $63.53 per barrel. Meanwhile, U.S. West Texas Intermediate crude futures decreased by 70 cents, or 1.16%, to reach $59.71 a barrel.

Brent and WTI have each experienced drops of 15% and 16%, respectively, this month, marking their largest percentage decline since November 2021.

Following U.S. President Donald Trump’s declaration of tariffs on all American imports in early April, both indexes dropped. The situation worsened when China retaliated by imposing duties on goods coming from the U.S., escalating into a trade conflict between the world’s leading consumers of oil. This tension pushed the indicators down even more, reaching their lowest levels in four years.

According to a Romero.my.id poll, Trump's tariffs on imports into the U.S. have increased the likelihood of the global economy slipping into a recession this year.

In April, China experienced its most rapid decline in factory activity over the past 16 months, according to a factory survey released on Wednesday.

Concerns over demand because of the trade conflict have negatively impacted investors' mood, according to Daniel Hynes, an ANZ Bank senior commodities strategist. He further explained, "Additionally, there are worries that the recent robustness in US economic figures might just be short-lived, resulting from pre-tariff inventory buildup which seems to be diminishing."

U.S. consumer confidence dropped to its lowest point in almost five years in April due to increasing worries about tariffs, according to data released on Tuesday.

Recent indications of a reduction in trade tensions, including two executive actions taken by Trump on Tuesday aimed at mitigating the impact of his car import duties, helped calm worries for international investors.

It should be noted that experts think the oil market will remain pressured as the Trump administration keeps focusing on maintaining low oil prices to control inflation.

Oil prices were also depressed by concerns over increasing supplies from the group referred to as OPEC+ which includes the Organization of the Petroleum Exporting Countries along with allied nations.

Multiple representatives from OPEC+ countries plan to propose increasing production levels for a consecutive second month in June, according to sources who spoke with Romero.my.id last week. The coalition is scheduled to convene on May 5 to deliberate on their output strategy.

According to market sources on Tuesday referencing American Petroleum Institute data, U.S. crude oil supplies increased by 3.8 million barrels over the previous week. [API/S]

Government data regarding stockpiles is scheduled for release at 10:30 a.m. ET (1430 GMT) on Wednesday. According to analysts surveyed by Romero.my.id, there is an expectation of a 400,000-barrel rise in U.S. crude oil inventories from the previous week. [EIA/S]

(Siyi Liu reported from Singapore and Nicole Jao from New York; editing by Shri Navaratnam and Sonali Paul)