Crude Oil and Gasoline Prices Rise Amid Mixed Market Signals

May WTI crude oil (CLK25) closed on Tuesday up +1.23 (+1.95%), while May RBOB gasoline (RBK25) also saw an increase, closing up +0.0343 (+1.66%).

Market Trends Affecting Crude and Gas Prices

On Tuesday, crude oil and gasoline prices settled significantly higher. The rebound in stock markets improved confidence in the economic outlook, bolstering risk-on sentiment across asset markets. This optimism helped lift crude prices. Additionally, expectations for the U.S. to negotiate trade deals with its partners, particularly after U.S. trade negotiators reported “significant progress” toward a deal with India, the world’s second-largest crude importer, added to the positive sentiment about economic growth and energy demand. However, a stronger dollar limited any potential gains in crude oil prices.

IMF Forecast and Its Impact on Demand

Meanwhile, the International Monetary Fund (IMF) took a bearish stance by revising its global GDP growth forecast for 2025 down to +2.8%, from an earlier estimate of +3.3%. Such a reduction is concerning for energy demand and crude prices.

Potential US-Iran Nuclear Deal and Supply Concerns

Crude oil prices are also facing pressure from discussions surrounding a potential U.S.-Iran nuclear deal that could lift export restrictions on Iranian crude oil. Iran’s foreign minister indicated that discussions with the U.S. were fruitful, leading to a “better understanding.” These talks are set to continue on Wednesday in Oman.

Additional bearish signals emerged as global crude oil held on tankers rose by +19% week-over-week to 78.19 million barrels as of April 18, marking the highest levels seen in eight months according to Vortexa data.

April marked a rough patch for crude prices, which fell to a four-year low on April 9. Continuous tariff issues have exerted pressure on energy prices amid fears of weakened global economic growth, despite President Trump pausing certain tariffs last Wednesday. Other previously announced tariffs remain unchanged.

Demand from China Offers Support

Contrastingly, increased crude demand from China, the world’s largest crude importer, is providing some support for oil prices. Reports indicate that China’s March crude imports soared to 12.1 million barrels per day (bpd), the highest since August 2023.

OPEC+ Production Adjustments

Crude prices are also impacted by the decisions of OPEC+. On April 3, the group announced it would boost production by 411,000 bpd in May, which is significantly higher than the +138,000 bpd added this month. The organization is gradually restoring a total of 2.2 million bpd of production, extending the timeline for reaching pre-cut levels until September 2026. In March, OPEC crude production rose by +80,000 bpd to reach a 13-month high of 27.43 million bpd.

Geopolitical Tensions and Sanctions

Crude oil prices are also buoyed by rising tensions in the Middle East that threaten supply stability. Recent airstrikes by Israel on Gaza have ended a nearly two-month ceasefire, as Israeli Prime Minister Netanyahu vowed to escalate military efforts against Hamas. Concurrently, U.S. strikes on Houthi rebels in Yemen signal ongoing geopolitical instability that affects crude supply.

On January 10, the U.S. imposed new sanctions targeting Russia’s oil industry. These measures could restrict global oil supplies and were aimed at companies that contributed to significant export volumes. Reports indicate Russian oil exports saw a monthly high of 3.45 million bpd in March; however, exports decreased by -40,000 bpd to 3.13 million bpd in the week ending April 13.

Expectations for EIA Weekly Reports

The market anticipates Wednesday’s weekly EIA report will show an increase of +1.55 million barrels in crude inventories, alongside a decrease of -1.4 million barrels in gasoline supplies.

In the previous EIA report dated April 11, U.S. crude oil inventories were reported to be -5.2% below the 5-year seasonal average, with gasoline inventories at -0.9% and distillate inventories at -10.2% below seasonal norms. U.S. crude production held steady at 13.462 million bpd, below the record high of 13.631 million bpd set in December.

Baker Hughes also reported that active U.S. oil rigs in the week ending April 18 rose by one, totaling 481 rigs. This figure remains above the three-year low of 472 rigs recorded on January 24, though the overall number of U.S. oil rigs has declined from a high of 627 rigs in December 2022.

On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. For more details, please view the Barchart Disclosure Policy
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.