Oil Prices Stabilize After Previous Day’s Decline

Oil prices demonstrated stability on Thursday, recovering from a sharp drop the previous day. The initial decline was sparked by indications that Saudi Arabia, a major global crude exporter, might increase its production, coupled with data revealing a contraction in the U.S. economy, the world’s largest oil consumer.

Brent crude futures experienced a slight decrease of 6 cents, or 0.1%, reaching $61 per barrel by 0730 GMT. Similarly, U.S. West Texas Intermediate crude futures saw a reduction of 12 cents, equivalent to 0.2%, settling at $58.09. Notably, WTI had closed at its lowest value since March 2021 on Wednesday.

Sugandha Sachdeva, the founder of SS WealthStreet, a research firm based in New Delhi, commented, “In the short run, the prevailing trend seems to be leaning towards further declines.”

Sachdeva added, “The combined effect of weakening demand and the potential for increased supply has fostered a negative outlook for crude oil. Brent crude appears susceptible to falling to $55 per barrel.”

Sources have reported that Saudi Arabia has communicated to allies and industry experts its reluctance to support the oil market through supply reductions, asserting its capacity to withstand a prolonged period of lower prices. Reportedly, several OPEC+ members are likely to propose that the group accelerates output increases in June for the second consecutive month. A meeting of eight OPEC+ countries is scheduled for May 5 to determine the production plan for June.

The U.S. economy experienced a contraction in the first quarter, marking the first decline in three years. This contraction was largely influenced by a surge in imports as businesses sought to avoid increased costs associated with tariffs, highlighting the disruptive impact of President Donald Trump’s trade policies.

According to a survey, it is anticipated that Trump’s tariffs could potentially lead the global economy into a recession this year. The combination of a demand outlook affected by trade disputes and an OPEC+ decision to raise supply is expected to put downward pressure on oil prices this year, as indicated by a poll.

Analytics firm Kpler has revised its forecast for global oil demand growth in 2025, reducing it from 800,000 barrels per day to 640,000 bpd, citing increasing trade tensions between China and the U.S., as well as weak demand from India.

A survey conducted in April involving 40 economists and analysts projected that Brent crude would average $68.98 a barrel in 2025, a decrease from March’s estimate of $72.94. They anticipate that U.S. crude will average $65.08 a barrel, compared to the previous month’s forecast of $69.16.

The Energy Information Administration reported on Wednesday that U.S. crude oil inventories decreased by 2.7 million barrels last week, driven by higher export and refinery demand. This contrasts with analysts’ expectations, as indicated by a poll, which anticipated a rise of 429,000 barrels.