Oil Holds April Drop as Saudi Signals OPEC+ Supply Increase
Oil was little changed after posting its biggest monthly decline since 2021, as signs that the Saudi-led OPEC+ alliance may be entering a prolonged period of higher output added to concerns that a global trade war would hurt demand.
West Texas Intermediate was trading around $58 a barrel after falling 3.7% on Wednesday, while the most-active Brent contract settled near $61. Reuters reported that Saudi officials have told allies and industry experts that the kingdom could endure a prolonged period of depressed prices, adding to existing concerns that the biggest oil exporter plans to direct OPEC+ to another supply surge next week.
OPEC+ rocked the crude market in early April with a surprise decision to increase output more than expected starting this month, stoking concerns about a global glut as non-member countries including Canada and Guyana also ramped up production.
Meanwhile, hopes faded that there would be a quick breakthrough in U.S.-led trade negotiations, weighing on the energy demand outlook. Data on Wednesday showed the U.S. economy contracted for the first time since 2022, while factory activity in China slipped to its worst contraction since December 2023. That overshadowed more bullish figures showing U.S. crude and gasoline inventories fell last week. Worldwide oil demand was unchanged from a year ago in April, at 102 million barrels a day, according to Morgan Stanley.
The bank had forecast a 500,000-bpd increase last month. “Uncertainty around the economic outlook likely contributed to the stalled growth, with naphtha imports in East Asia — a leading indicator of industrial demand — falling to a five-year low,” analysts including Prateek Kedia and Natasha Kaneva said in a note.
Source: Bloomberg
