By Elizabeth Hampton
(Reuters) – Hello Power Up readers! Markets are continuing to spiral downward as U.S. President Donald Trump’s trade war stokes growing concerns of a recession. The S&P 500 extended its fall, nearing bear territory, and Goldman Sachs on Monday forecast a 45% chance of a recession in the United States next month.
Oil prices had closed 7% lower on Friday – the lowest level in three years – after China announced retaliatory tariffs on U.S. goods, escalating a global trade war. Brent posted its biggest weekly loss in percentage terms in a year and a half, while WTI saw the biggest decline in two years.
Global Brent futures were trading around $64.16 a barrel on Monday, off 2%, while U.S. West Texas Intermediate futures were at $60.73 a barrel, also down 2%. Natural gas futures slipped 1.3% to $3.785 per million British thermal units.
Goldman sees 45% risk of U.S. recession Oil prices are in a tailspin, as the market digests an escalating trade war and news that the Organization of Petroleum Exporting Countries and allies will speed up output increases.
The steep drop in oil prices over the last few days is raising questions about what will happen with U.S. oil production, which has already been set for slower growth.
While oil and gas executives have expressed much public support for the Trump administration, the latest energy survey from the Dallas Fed, which allows participants to anonymously share comments, indicated at least some private concerns for how his policies are impacting the industry. Even before “Liberation Day” executives warned that tariffs on steel were driving up costs.
One executive said that their costs for casing and tubing increased by 25% as a result of the tariffs. Others warned that the protectionist trade policies were making planning difficult and driving uncertainty throughout the market.
“The threat of $50 oil prices by the administration has caused our firm to reduce its 2025 and 2026 capital expenditures. ‘Drill, baby, drill’ does not work with $50 per barrel oil’,” said one survey participant.
That comment came before oil actually dropped to around $60 a barrel.
U.S. oil prices need to average $65 a barrel for drillers to make a profit, according to the Dallas Fed Energy Survey. Large firms – or those with 10,000 barrels per day of production – need at least $61 a barrel oil to make a profit, while smaller firms need at least $66 a barrel crude.
Goldman Sachs on Friday lowered its forecast for Brent crude’s average price by 5.5% to $69 a barrel. It lowered its forecast for U.S. West Texas Intermediate by 4.3% to $66 a barrel.
All of this comes as eight OPEC+ countries surprised the market last week when they advanced their plan to phase out oil output cuts, increasing production by 411,000 barrels per day in May. They had been scheduled to lift output by 135,000 bpd.29dk2902l
Saudi Arabia’s anger toward Kazakhstan and other over-producing nations was a driver behind the decision, Reuters reported. Saudi has been pushing Kazakhstan and Iraq to improve compliance with production cuts.
Even so, Kazakhstan has had record output figures for several months as Chevron and Exxon Mobil expand production there.
Saudi Arabia on Sunday slashed crude prices to Asian buyers for May to their lowest level in four months to $1.20 a barrel above the average of Oman and Dubai prices, down from $2.30 previously. That marks the largest decline in two years and the second month Aramco has lowered prices.
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The U.S. rig count fell for a second week in a row last week, but the number of oil rigs in operation climbed to their highest since June, Baker Hughes said on Friday. The total rig count fell by two to 590, while oil rigs rose by five to 489.
BP Chair Helge Lund will likely step down in 2026, the energy company said on Friday, amid a push by activist investor Elliot to change the company. Lund had been part of the 2020 strategy to move away from oil and gas, which included cutting its hydrocarbon output by 40% this decade.
Fossil fuels accounted for less than half of the U.S. power mix for the first month on record in March, according to an analysis of U.S. government data by think tank Ember. The shift was driven by a near-quarter rise in wind and solar generation.
Japanese company Mitsubishi Corp may invest in an LNG project in Alaska, its chief executive said on Friday. This comes as an Alaskan delegation visited Japan last week to brief policy makers and meet possible backers for the $44 billion project.
The United States has identified 16 potential sites on Department of Energy lands where data centers and power plants supporting the boom in artificial intelligence could be developed. The DOE said the sites are positioned for rapid data center construction, including in-place energy infrastructure with the ability for faster permitting.
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Editing by Mark Porter
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