Oil prices showed tentative signs of recovery in early Asian trading Thursday, stabilizing after a sharp midweek selloff driven by expectations of increased Saudi oil production and signs of economic contraction in the United States.
Brent crude futures edged up 0.1% to $61.13 a barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 0.02% to $58.22 as of 0318 GMT. WTI settled on Wednesday at its lowest level since March 2021, capping a volatile session marked by risk-off sentiment across global markets.
“The near-term momentum for crude remains under pressure, with downside risks outweighing bullish catalysts,” said Sugandha Sachdeva, founder of SS WealthStreet in New Delhi. “We are looking at a scenario where demand is cooling, while supply may expand, especially if Saudi Arabia follows through on its signals.”
Saudi Strategy and OPEC+ Dynamics
Industry sources told Reuters that Saudi Arabia is signaling a readiness to allow oil prices to decline, opting not to support the market with production cuts. The kingdom, a key OPEC+ member, has reportedly indicated it can withstand a prolonged period of subdued prices — a stance that adds pressure to an already fragile oil market.
Three sources familiar with the matter said that some OPEC+ members will propose accelerating output hikes for a second straight month when eight member countries meet on May 5 to decide on June production quotas.
“Any surprise in the pace or scope of production adjustments could drive renewed volatility,” Sachdeva added, underscoring the uncertainty surrounding the upcoming OPEC+ decision.
U.S. Contraction Fuels Demand Concerns
Compounding the bearish tone, the U.S. economy shrank in Q1 2025, its first contraction in three years, driven by a surge in imports as companies rushed to avoid higher costs tied to President Trump’s aggressive tariffs. The economic contraction has intensified fears that global growth may be slowing — dragging energy demand along with it.
A Reuters poll of economists found that most expect Trump’s tariff regime to tip the global economy into recessionlater this year.
Lower Demand Outlook
The weaker demand outlook is reflected in updated forecasts. Kpler, a global energy analytics firm, revised its 2025 global oil demand growth forecast downward to 640,000 barrels per day, from an earlier estimate of 800,000 bpd. The firm cited rising U.S.-China trade tensions and subdued consumption from India as key contributors.
In April, a survey of 40 economists and analysts projected Brent crude would average $68.98 per barrel in 2025, down from a prior forecast of $72.94. U.S. crude is now expected to average $65.08 per barrel, lower than the $69.16 estimated just a month earlier.
U.S. Stockpile Trends Offer Some Relief
Despite the broader bearish narrative, the latest data from the U.S. Energy Information Administration (EIA) offered a sliver of support. Crude inventories fell by 2.7 million barrels last week, well above the 429,000-barrel draw analysts had forecast. The decline was attributed to stronger export volumes and increased refinery activity.
Outlook Remains Bearish, Market Eyes OPEC+
For now, analysts caution that the oil market remains highly vulnerable to both geopolitical shifts and macroeconomic data. The upcoming OPEC+ meeting on May 5, along with further insight into the U.S. trade and inflation landscape, could be pivotal in determining whether crude prices find lasting support or test new lows.
