Market Update: Crude Oil Prices Decline Amid Global Demand Forecast Cuts

May WTI crude oil (CLK25) is currently down -0.23 (-0.37%), while May RBOB gasoline (RBK25) has increased by +0.0033 (+0.16%).

Price Fluctuations and Economic Concerns

Mixed trading characterizes crude oil and gasoline prices today. A stronger dollar is negatively impacting crude prices, and an announcement from the International Energy Agency (IEA) cutting its global demand forecast is contributing to bearish sentiments. Additionally, fears regarding the escalating US-China trade war are raising concerns about economic growth, especially following reports that China has halted airline deliveries of Boeing jets. However, a rise in stock market performance indicates market confidence in economic recovery, which could bolster energy demand and support crude prices.

IEA Forecast Adjustments and Rising Demand

The IEA has adjusted its 2025 global crude demand forecast downward by 300,000 bpd, now estimating demand at 730,000 bpd compared to the earlier projection of 1.03 million bpd. The agency also noted a slowdown in 2026 global crude consumption to 690,000 bpd, attributing this to a “fragile macroeconomic environment.” Despite these cuts, increased crude imports in China—the world’s leading crude importer—are providing some support for prices. Reports indicate that China’s March crude imports surged to 12.1 million bpd, the highest level since August 2023.

Geopolitical Tensions and Their Impact

Ongoing nuclear negotiations between the US and Iran suggest that easing export restrictions on Iranian crude could put further pressure on oil prices. Recent talks in Oman were described as constructive, with both parties agreeing to reconvene in a week. Meanwhile, Goldman Sachs highlighted that global crude demand faces downward pressure from the trade war, coupled with increased output from OPEC+, which could lead to anticipated surpluses of 800,000 bpd in 2025 and 1.4 million bpd in 2026.

Production Pressures and OPEC+ Decisions

Crude prices have struggled in recent days, recently reaching a four-year low. Concerns over tariffs and their impact on global energy demand persist, even as President Trump has put a temporary hold on some reciprocal tariffs. OPEC+ announced an increase in crude production in May by 411,000 bpd, far exceeding the earlier addition of 138,000 bpd. This gradual restoration of 2.2 million bpd of production aims to reverse a two-year-long production cut, although full restoration won’t occur until September 2026. OPEC reported a rise in March crude production of +80,000 bpd to 27.43 million bpd, a level not seen in over a year.

Global Supply and Storage Trends

Crude oil stored globally on tankers has increased, which typically suggests lower prices ahead. Vortexa noted a +0.4% week-over-week rise, bringing storage levels to 65.72 million bbl as of April 11. However, tensions in the Middle East are generating concerns that could disrupt supply chains. Recent military actions between Israel and Hamas, along with ongoing US strikes on Houthi rebels in Yemen, contribute to this uncertainty.

Sanctions and Production Dynamics

On January 10, new US sanctions targeting Russia’s oil industry could further impact global oil supplies. Measures have focused on Gazprom Neft and Surgutneftgas, which accounted for approximately 30% of Russia’s tanker exports. Despite these sanctions, Russian oil product exports rose to a five-month high of 3.45 million bpd in March, indicating persistent demand.

US Inventory Data and Rigs Update

According to last Wednesday’s EIA report, US crude oil inventories as of April 4 were down -5.2% from the seasonal five-year average. In contrast, gasoline inventories rose +0.4%, while distillate inventories fell -8.9%. Furthermore, US crude production for the week ending April 4 declined -0.9% to 13.458 million bpd, just below its record high. Baker Hughes reported that the number of active US oil rigs fell by -9 to 480 rigs, remaining above the three-year low of 472 rigs seen earlier this year.

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 are solely for informational purposes. For more information, please see the Barchart Disclosure Policy here.

 

More news from Barchart

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.