Oil Set For Historic April Selloff As Trade War Darkens Outlook

Crude has been battered this month, touching a four-year low, as US President Donald Trump’s sweeping trade levies — especially on top importer China — have blunted the outlook for energy consumption. Oil performs historically bad in April. Source: bloomberg

Oil headed for its biggest, full-month loss for April on signs the US-led trade war is hurting economic growth and energy demand at a time when the OPEC+ alliance has been loosening supply curbs.

Global benchmark Brent — which fell toward $63 a barrel on Wednesday — has shed about 15% this month, the largest loss for that period since the contract started trading in 1988. West Texas Intermediate was back in the upper $50s.

As the main industrial commodity, crude is often subject to huge monthly swings. In April 2020, as the pandemic ripped through markets, WTI actually traded in negative territory at one point. Still, Brent ended higher that month, and WTI's full-month performance was not as bad as the current showing.

Data due later on Wednesday may confirm a slowdown in US economic growth, after figures showed that consumer confidence collapsed to an almost five-year low. In China, factory activity slipped into the worst contraction since December 2023, revealing early damage from the trade war.

Crude has been battered this month, touching a four-year low, as US President Donald Trump's sweeping trade levies — especially on top importer China — have blunted the outlook for energy consumption. On the supply side, OPEC+ has been easing output curbs, with JPMorgan Chase & Co. warning the cartel may accelerate planned production increases at a meeting next week.

“I have been arguing that Brent was headed back into a $60-to-$65 range for the last couple of weeks,” said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp., citing OPEC+ supply policy, as well as prospects for revived flows from Kazakhstan. “The next six-to-eight weeks should start to see rising supply and rising inventory.”

In the US, nationwide commercial crude stockpiles climbed 3.8 million barrels last week, according to an estimate from the American Petroleum Institute, which also saw a modest rise at the key hub in Cushing, Oklahoma. Official data on holdings are due later on Wednesday.

Prices:

Brent for June delivery, which expires on Wednesday, shed 1.2% to $63.50 a barrel at 2:19 p.m. in Singapore.
- Compared with all prior months, Brent's retreat in April is the deepest since November 2021, when prices lost more than 16%.
- The more-active July contract dropped 1.1% to $62.56 a barrel.
WTI for June delivery was 1.3% lower at $59.62 a barrel.

Trump said China deserved the steep tariffs he'd imposed on their exports, according to remarks to ABC News. He added that he did not believe hard times were ahead for US consumers, while acknowledging that his 145% tariffs on many Chinese goods amounted to a near-embargo.

OPEC+ rocked the crude market in early April, with a surprise decision to increase supply in May by 411,000 barrels a day, the equivalent of three monthly tranches from a previous plan. The group's meeting scheduled for May 5 is intended to lock in a decision on the volume that'll be added in June.

The alliance's policy is “perhaps the most significant risk,” Vivek Dhar, an analyst at Commonwealth Bank of Australia, said in a note. “Markets are justifiably worried that OPEC+ could add more supply than planned once again.”

Beyond OPEC+, non-cartel nations are also expected to add supplies, including drillers in Canada and Guyana, feeding concerns about a global glut. Morgan Stanley has said it expects a “meaningful surplus” to develop over time, although nearer-term metrics suggest tightness.