Crude oil prices extended their latest decline today, looking set for a monthly drop that, according to Reuters, will be the deepest in three years.
At the time of writing, Brent crude was trading at $63.46 per barrel, with West Texas Intermediate at $59.68 per barrel. Since the start of the month, the benchmarks have lost between 15% and 16%, Reuters reported. This is the deepest dive since November 2021.
Trump’s tariff offensive seems to be the chief reason for the price decline, with virtually every analyst and economist predicting global economic trouble because of the tariffs. The predictions naturally affect oil prices negatively, but the effect has been reinforced by OPEC+’s decision to roll back its production cuts by a larger amount than initially planned, deepening fears of oversupply.
In more recent news that pressured the benchmarks, Chinese factory activity shrank in April as a direct result of Trump’s tariff barrage, with the purchasing managers’ index reading for the month dipping from 50.5 in March to 49, Reuters reported earlier today.
“The sharp drop in the PMIs likely overstates the impact of tariffs due to negative sentiment effects, but it still suggests that China’s economy is coming under pressure as external demand cools,” Capital Economics analyst Zichun Huang told Reuters. “Although the government is stepping up fiscal support, this is unlikely to fully offset the drag, and we expect the economy to expand just 3.5% this year,” she added.
Since any bad economic news out of China tends to pressure oil prices immediately, this latest report will likely weigh on Brent crude and WTI as well, potentially deepening the weekly rout and extending it over time. A weekly build in U.S. crude oil inventories reported by the American Petroleum Institute on Tuesday did not help prices, either, even though it follows a bigger draw for the previous reporting week.
By Irina Slav for Oilprice.com
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