Oil prices extended their decline on Thursday amid prospects of stronger supply by Saudi Arabia and data showing that the U.S. economy contracted in the first quarter.
As of 4:36 GMT, Brent crude futures slipped 1.76 percent to $63.12, while U.S. West Texas Intermediate crude futures declined 0.15 percent to $58.12. Analysts noted that in the near term, the path of least resistance remains tilted to the downside. Oil prices have taken a hit from deteriorating demand and prospects of a supply expansion, which has created a pessimistic outlook.
Brent and WTI have both lost 15 percent and 16 percent, respectively, last month, marking the biggest percentage drop since November 2021.
OPEC+ to raise output in June
Saudi Arabia is telling allies and industry experts that it is unwilling to prop up the oil market with supply cuts and can manage a prolonged period of low prices, sources told Reuters. Several OPEC+ members will also suggest the group accelerate output hikes in June for a second consecutive month, three people familiar with OPEC+ talks have said.
The eight OPEC+ countries will meet on May 5 to decide a June output plan. OPEC+ is cutting output by over 5 million barrels or 5 percent of global supply. In its latest meeting, the group decided to triple its planned output increase to 411,000 bpd. This still leaves more than 5 million bpd of cuts, which the group aims to unwind by the end of 2026.
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U.S. economy slows for first time in three years
In the U.S., the world’s largest oil consumer, the economy contracted for the first time in three years in the first quarter of fiscal 2025 as businesses rushed to import goods ahead of Trump’s expected tariffs. The Bureau of Economic Analysis said the U.S. economy contracted at an annualized rate of 0.3 percent during the first quarter of 2025 after growing at a solid pace of 2.4 percent in the previous quarter. This decline has triggered demand concerns, further impacting oil prices.
Meanwhile, U.S. consumer confidence fell to its lowest in nearly five years in April on growing concerns over tariffs, data showed on Tuesday.
U.S. President Donald Trump announced tariffs on all U.S. imports on April 2, and China responded with its own charges, triggering a trade war between the world’s top two oil-consuming nations. Concerns over the global economy weakening continued to pressure oil prices, with the latest U.S. economic data reviving concerns about a looming recession. Several factors continue to impact oil prices, including trade tensions and a potential OPEC+ decision to increase supply.
In addition, U.S. crude oil stockpiles fell by 2.7 million barrels last week on higher export and refinery demand, the Energy Information Administration said on Wednesday.
