Oil Holds April’s Slump As Saudis Signal Increased OPEC+ Supply
Oil was little changed after the biggest monthly drop since 2021, as signs that the Saudi-led OPEC+ alliance may be entering a prolonged period of higher output added to concerns the trade war will hurt demand.
Brent for July traded near $61 a barrel after dropping 3.5% on Wednesday, while West Texas Intermediate was near $58. Reuters reported that Saudi Arabian officials told allies and industry experts that the kingdom can endure a sustained period of depressed prices, reinforcing expectations that the biggest oil exporter planned to steer OPEC+ to another supply surge next week.
Crude sank 16% in April, after OPEC+ rocked the market with a surprise decision to increase production more than expected from this month, just as non-members including Guyana also ramp up output. With the trade war starting to drag on economies from the US to China, endangering the outlook for energy demand, banks including Morgan Stanley have warned of a glut.
While US Trade Representative Jamieson Greer told Fox News the US was nearing an announcement of a first tranche of trade deals, he also said he had not had official talks with his Chinese counterpart yet. In separate remarks, President Donald Trump said there was a good chance of a deal with Beijing.
Data on Wednesday showed the US economy shrank for the first time since 2022, while factory activity in China slipped into the worst contraction since December 2023. That overshadowed more bullish figures showing US crude and gasoline inventories dropped last week.
Worldwide oil demand was unchanged from year-ago levels in April, at 102 million barrels a day, according to Morgan Stanley. The bank had forecast a 500,000 barrel-a-day increase for last month.
“The uncertainty surrounding the economic outlook likely contributed to stalled growth,” analysts including Prateek Kedia and Natasha Kaneva said in a note. Naphtha imports in East Asia, a key indicator of industrial demand, had droped to five-year lows, they said.
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