Oil prices have stabilized, but will soon decline again
1 May 2025 09:39
Oil prices stabilized in early Asian trading on Thursday, "Komersant Ukrainian" reports citing Reuters. This stabilization came a day after a sharp drop caused by signs that Saudi Arabia may increase production and data showing a contraction in the US economy.
According to OilPrice.com, futures for Brent crude oil rose 10 cents, or 0.16%, to $61.16 per barrel as of 08:44 Kyiv time. Futures for US West Texas Intermediate (WTI) rose 3 cents, or 0.05%, to $58.24. At the same time, on Wednesday, WTI closed at its lowest level since March 2021.
“In the short term, the path of least resistance remains downward. The dual impact of deteriorating demand and future supply expansion has created a pessimistic outlook for oil, and Brent crude seems vulnerable to testing the $55 per barrel level,”
– said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.
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Saudi Arabia has made up its mind
Saudi Arabia has finally told allies and industry experts that it is not ready to support the oil market by cutting supplies and can cope with a prolonged period of low prices. This was reported by Reuters sources.
Several OPEC members will propose to the group to accelerate the increase in production in June for the second consecutive month, said three people familiar with the OPEC talks. Eight OPEC countries will meet on May 5 to determine the production plan for June.
“Any surprise in the pace or scale of the production adjustment could have a significant impact on volatility in the coming sessions,”
– Sachdeva said.
In the U.S., the world’s largest oil consumer, the economy contracted for the first time in three years in the first quarter, flooded by a flood of imports as businesses rushed to avoid higher costs due to tariffs.
According to a Reuters poll, Trump’s tariffs have made it likely that the global economy will enter a recession this year.
U.S. crude oil inventories fell by 2.7 million barrels last week due to increased export and refinery demand, the Energy Information Administration reported on Wednesday.
Forecast
A demand outlook overshadowed by trade disputes, combined with OPEC’s decision to increase supply, will weigh on oil prices this year, a Reuters poll showed on Wednesday.
Analyst firm Kpler has revised its forecast for global oil demand growth in 2025 to 640,000 barrels per day from 800,000 barrels per day, citing rising trade tensions between China and the United States and weak demand from India.
A survey of 40 economists and analysts in April predicted that Brent crude would average $68.98 per barrel in 2025, down from March’s estimate of $72.94. They expect U.S. oil to average $65.08 per barrel, not $69.16 as predicted last month.
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