Crude oil futures plunged and are poised for their largest monthly decline in more than three years. Oil prices slumped in the middle of the trading week after Saudi Arabia teased expanded production and global trade war fears eroded the demand outlook.
June West Texas Intermediate (WTI) crude oil futures plummeted $1.92, or 3.18%, to $58.58 per barrel at 18:21 GMT on Wednesday on the New York Mercantile Exchange. US crude will register a monthly loss of 17% and is down nearly 19% year-to-date.
Brent, the global benchmark for oil prices, fell below $62 midweek. July Brent crude futures tumbled $1.98, or 3.13%, to $61.30 a barrel on London’s ICE Futures exchange. Brent will also post a March decline of about 16%, adding to this year’s drop of 18.11%.
Investors are reacting to a Reuters story that Saudi Arabia, one of the world’s largest petroleum producers, would accelerate output and endure a prolonged period of low oil prices.
In addition, several alliance members of the Organization of the Petroleum Exporting Countries teased that they would bolster output increases for the second straight month in June.
All eyes will be on the OPEC meeting on May 5.
“The very real possibility that OPEC+ will continue to bring extra barrels to the market as it fights to keep order within its ranks is added to the diplomatic thrusts in Ukraine and Iran, which if successful means more international crude on the water at a time when a trade war will squash any hope of demand growth,” said PVM analysts in a note to CNBC.
Industry data suggest robust domestic demand. According to the US Energy Information Administration (EIA), crude oil inventories fell 2.696 million barrels for the week ending April 25. This is down from the previous week’s tepid build of 244,000 barrels.
Gasoline supplies dropped 4.002 million barrels. Distillate stockpiles surged 937,000 barrels, while heating oil inventories rose 252,000 barrels.
Traders are also reacting to new US economic data, which revealed a first-quarter GDP growth rate of -0.3%.
In other energy commodities, June natural gas futures slipped $0.045, or 1.22%, to $3.629 per million British thermal units (Btu). June gasoline futures shed $0.0382, or 1.86%, to $2.019 a gallon. June heating oil futures dropped $0.059, or 2.86%, to $2.0027 per gallon.