Brent crude oil, the global benchmark, is on track to record its worst April performance since trading began in 1988, falling over 14% this month. It hovered near $64 a barrel, while West Texas Intermediate (WTI) lingered close to $60 per barrel, reflecting global economic concerns and weakening energy demand triggered by ongoing US-led trade tensions.

This steep drop comes as global economic indicators flash warning signs, with consumer confidence in the US falling to a nearly five-year low, and as data due later is expected to confirm a slowdown in US GDP growth.

Crude Inventories on the Rise

Adding further weight to the bearish sentiment in oil markets, the American Petroleum Institute (API) estimated a 3.8 million barrel increase in nationwide US crude stockpiles last week. A modest increase at Cushing, Oklahoma, the key storage hub, also contributed to pressure on prices.

The build in inventory indicates muted refinery activity and reduced end-user demand, both of which are typical in times of economic uncertainty. Traders are closely watching for the official Energy Information Administration (EIA) data, expected to either confirm or revise API's numbers.

Impact of Trade War and OPEC+ Strategy

One of the major culprits behind this decline is the trade war, particularly President Donald Trump's sweeping tariffs on major trading partners like China. These measures are hurting global growth, and more critically, blunting energy consumption across industrial sectors.

Simultaneously, OPEC+ has begun loosening production cuts, further complicating the supply-demand balance. JPMorgan Chase & Co. has warned that the OPEC alliance might accelerate its supply increases at its upcoming meeting, potentially worsening the oversupply situation.

Russian Oil Exports Rise Despite Sanctions

Despite the bearish environment, Russia's oil exports edged higher for the second week in a row. Export flows from all Russian ports in the four weeks to April 27 rose to 3.26 million barrels per day, up 1% from the previous week. This increase is partly due to the return of tankers that were previously sanctioned, now back in operation and carrying Russian crude once again.

This resurgence of Russian oil in the global market adds another layer of supply at a time when demand is softening, further tipping the scales against higher prices.

Market Sentiment and Outlook

As Brent crude tests its lowest April levels in history, market sentiment has clearly turned risk-off. The combination of rising inventories, weaker economic growth, and supply-side pressure has left the oil market extremely fragile.

There is also a widening disconnect between physical and financial markets, with speculative positioning increasingly bearish. Many traders have begun to price in a prolonged period of weak demand, especially if the trade war continues to escalate.

What’s Next for Oil Markets?

The oil market is likely to remain volatile in the coming weeks, with attention focused on:

• OPEC+ decisions at its upcoming meeting, particularly regarding production strategy.

• Economic data from major economies, especially the US and China.

• Further updates on trade negotiations or tariff escalations that could affect global commerce.

• US inventory reports, particularly the EIA data that could confirm or deny current API estimates.

Should US economic indicators continue to deteriorate and tariffs remain, it is unlikely that oil will see a strong recovery in the near term. The market may have to absorb an oversupply situation in the coming months unless there is a strategic production cut or a demand-side surprise.

Conclusion

The oil market is navigating one of its most challenging Aprils in recent memory, with Brent crude shedding over 14%—a record decline for the month. Rising inventories, weakening global demand, and persistent trade tensions form the trifecta dragging prices down.

Unless there’s a meaningful shift in macroeconomic policy, such as tariff rollbacks or OPEC+ supply restraints, oil may continue its downward trajectory. Market participants and policymakers alike will need to carefully monitor global cues to anticipate the next move in this volatile sector.

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