Topic 3: CRUDE: TUG OF TRADE
April 2025 was a turbulent month for global energy markets, with crude oil prices plunging nearly 18% amid rising supply and weakening demand. Prices declined from $71.26 per barrel on April 1 to close the month at $58.36, reaching their lowest levels in over four years. From supply-side shocks to waning demand and deteriorating sentiment. There are several key factors contributed to this sell-off. In a surprising move, OPEC+ ramped up production, adding over 800,000 barrels per day across two months. This accelerated supply increase raised fears of a renewed oversupply glut, just as the global economy showed signs of fragility. The reemergence of U.S.–China trade tensions significantly rattled markets. The imposition of new tariffs by the U.S., followed by swift retaliatory measures from China, rekindled concerns of a global slowdown, casting a shadow over future oil demand. Economic data painted a sobering picture: slowing growth across the U.S., China, and the European Union, with the U.S. economy contracting in Q1 2025. These developments further eroded expectations for energy consumption, dragging down crude prices. Adding to the bearish tone were unexpected builds in U.S. crude oil inventories, which indicated softer domestic demand. The inventory overhang added downward pressure and reinforced concerns of supply-demand imbalance. As crude prices breached key technical levels, algorithmic and momentum-based selling kicked in, amplifying the decline. Heightened volatility and negative market sentiment turned a steady drop into a sharp sell-off. To summarise, April’s oil price collapse was fuelled by a toxic mix of oversupply, geopolitical strain, weak global demand, rising inventories, and market panic—a clear reminder of the oil market's sensitivity to both fundamentals and sentiment.
