Lagos — Crude Oil prices suffered a significant plunge in April, marking their worst monthly performance since 2021. Brent crude fell by over 17%, while WTI dropped approximately 18%. This correction stems from a series of factors that have sparked uncertainty in global energy markets, particularly regarding the health of global crude demand.
One of the main areas of concern is China, the world’s largest oil importer. Recent data revealed a contraction in its manufacturing activity and a slowdown in the services sector. These indicators reflect a stall in the country’s post-pandemic economic recovery, which has weakened short-term energy consumption expectations.
Adding to this concern is the unexpected rise in crude inventories in the United States, reinforcing the perception of weaker-than-expected domestic demand. This increase in reserves puts downward pressure on prices and suggests reduced economic activity in the world’s largest economy.
In response to these signals, Saudi Arabia cut the selling prices significantly for its Asian crude destined. This move reflects the kingdom’s intention to maintain its market share in a region where competition has intensified due to abundant supply and declining energy appetite.
Additionally, the market is closely watching potential decisions from OPEC+ at its upcoming meeting. There is speculation about a possible increase in production, which could further drive oil prices down if there is no clear rebound in global demand. The cartel’s policies will continue to be a key factor in the market’s evolution in the coming months.
Finally, peace talks between Russia and Ukraine have also influenced market perception. A possible agreement could facilitate the reintegration of Russian crude into international channels, increasing available supply and putting additional pressure on prices.
In conclusion, April has been a turbulent month for the crude oil market, shaken by negative demand signals, strategic decisions by producers, and evolving geopolitical tensions. As market participants await key outcomes from OPEC+ and the conflict resolution in Eastern Europe, the near-term outlook for crude oil remains highly volatile and sensitive to new economic or political developments.”
*Analysis by Antonio Di Giacomo, Financial Markets Analyst for LATAM at XS
