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Crude Oil Markets Face Steepest Decline Since 2021 As Inventories Build And Demand Slow
(MENAFN- The Rio Times) Oil prices stabilized Thursday morning after a historic rout, with Brent crude at $61.13 and West Texas Intermediate (WTI) at $58.22 per barrel, according to market data as of May 1, 2025.
Both benchmarks suffered their sharpest monthly declines since 2021, falling over 18% since the start of the year. This plunge followed a wave of selling triggered by OPEC+ supply policy shifts and deepening global trade tensions.
Charts for both Brent and WTI show a clear technical breakdown. Prices crossed below key moving averages, with the 200-hour simple moving average now acting as resistance.
The slide accelerated in the last days of April, as bearish momentum gathered pace and sellers overwhelmed buyers. Both contracts tested multi-year lows, with WTI closing Wednesday at its weakest since March 2021.
The main driver behind this downturn lies with OPEC and its leading members. Saudi Arabia and seven other producers agreed to boost output by 411,000 barrels per day in May, a move that surprised many traders.
The group had previously planned a smaller increase, but recent meetings signaled a willingness to tolerate lower prices and prioritize market share over price support.
OPEC+ leaders have also stressed flexibility, saying they could pause or reverse these increases if market conditions change. This supply shift comes as global demand growth slows.
U.S.-China Trade Tensions
The U.S.-China trade war, now in a heightened phase, has hit manufacturing and industrial activity in both countries. The U.S. economy contracted in the first quarter, its first decline in three years.
Key manufacturing indices in both the U.S. and China fell below 50, signaling contraction. The International Energy Agency and other analysts have cut their 2025 global oil demand growth forecasts by several hundred thousand barrels per day.
U.S. crude inventories have added to the bearish sentiment. The American Petroleum Institute reported a 3.76 million barrel build for the week ending April 25, reversing the previous week's draw and exceeding expectations.
Storage utilization at Cushing, the U.S. delivery hub, has climbed to 82%, up 7% month-over-month, reflecting regional oversupply. Market participants have responded by reducing exposure.
ETF outflows and falling managed money long positions show that traders are bracing for further volatility. Technical signals point to continued downside risk, with analysts warning that Brent could test $55 if current trends persist.
Looking ahead, the market' focus turns to the next OPEC+ meeting on May 5, where further production policy may be set. With global inventories rising and demand growth uncertain, traders remain cautious.
The oil market now faces a new reality shaped by mercantile competition, shifting alliances, and the hard math of supply and demand.
Both benchmarks suffered their sharpest monthly declines since 2021, falling over 18% since the start of the year. This plunge followed a wave of selling triggered by OPEC+ supply policy shifts and deepening global trade tensions.
Charts for both Brent and WTI show a clear technical breakdown. Prices crossed below key moving averages, with the 200-hour simple moving average now acting as resistance.
The slide accelerated in the last days of April, as bearish momentum gathered pace and sellers overwhelmed buyers. Both contracts tested multi-year lows, with WTI closing Wednesday at its weakest since March 2021.
The main driver behind this downturn lies with OPEC and its leading members. Saudi Arabia and seven other producers agreed to boost output by 411,000 barrels per day in May, a move that surprised many traders.
The group had previously planned a smaller increase, but recent meetings signaled a willingness to tolerate lower prices and prioritize market share over price support.
OPEC+ leaders have also stressed flexibility, saying they could pause or reverse these increases if market conditions change. This supply shift comes as global demand growth slows.
U.S.-China Trade Tensions
The U.S.-China trade war, now in a heightened phase, has hit manufacturing and industrial activity in both countries. The U.S. economy contracted in the first quarter, its first decline in three years.
Key manufacturing indices in both the U.S. and China fell below 50, signaling contraction. The International Energy Agency and other analysts have cut their 2025 global oil demand growth forecasts by several hundred thousand barrels per day.
U.S. crude inventories have added to the bearish sentiment. The American Petroleum Institute reported a 3.76 million barrel build for the week ending April 25, reversing the previous week's draw and exceeding expectations.
Storage utilization at Cushing, the U.S. delivery hub, has climbed to 82%, up 7% month-over-month, reflecting regional oversupply. Market participants have responded by reducing exposure.
ETF outflows and falling managed money long positions show that traders are bracing for further volatility. Technical signals point to continued downside risk, with analysts warning that Brent could test $55 if current trends persist.
Looking ahead, the market' focus turns to the next OPEC+ meeting on May 5, where further production policy may be set. With global inventories rising and demand growth uncertain, traders remain cautious.
The oil market now faces a new reality shaped by mercantile competition, shifting alliances, and the hard math of supply and demand.
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