Recap: The oil market plunged on Thursday, giving up most of its gains seen over the last few weeks since early March, as a decision by OPEC+ to advance its unwinding of oil output cuts in May added to already heavy losses following U.S. President Donald Trump’s announcement of sweeping new tariffs on Wednesday afternoon. On the opening, the crude market gapped lower from $70.59 to $70.38 and partially backfilled that gap as it posted a high of $70.41. However, the market sold off sharply amid concerns of a global trade war, after President Trump announced a 10% minimum tariff on most goods imported to the U.S., with much higher duties on products from dozens of countries. Imports of oil, gas and refined products were exempted from the new tariffs. The market’s losses were compounded by an OPEC+ decision to advance their plan for oil output hikes, now aiming to return 411,000 bpd to the market in May, up from an initially planned 135,000 bpd increase. The crude market sold off almost 8% as it posted a low of $65.98 by midday. The market later retraced some of its sharp losses and traded within a range from $66-$67 during the remainder of the session. The May WTI contract settled down $4.76 at $66.95 and the June Brent contract settled down $4.84 at $70.14. The product markets ended sharply lower, with the heating oil market settling down 13.31 cents at $2.1889 and the RB market settling down 16.67 cents at $2.1643.
Technical Analysis: The crude market will likely retrace some of Thursday’s sharp losses before it continues to trend lower amid the bearish news regarding the OPEC+ unwinding of its output cuts and the new tariffs imposed on dozens of nations. While imports of oil, oil products and natural gas were exempt from the tariffs announced by President Trump, the concerns of a trade war and its impact on the global economy will likely continue to pressure the market. The crude market is seen finding support at its low of $65.98, $65.83, $65.00 and $64.85. Resistance is seen at $67.50, $68.38, $69.13, $69.87 and its gap from $70.41-$70.59.
Fundamental News: The White House said imports of oil, gas and refined products were exempted from U.S. President Donald Trump’s sweeping new tariffs he announced on Wednesday. President Trump announced he would impose a 10% baseline tariff on all imports to the U.S. and higher duties on dozens of the country’s biggest trading partners, including a 20% fee on the European Union, 24% on Japan, 27% on India, 10% on Britain and 34% on China. However, a White House official said the trade protections do not apply to energy imports from Canada or Mexico, which are already exempted under the United States-Mexico-Canada Agreement free trade deal, nor do they apply to energy imports from any other country.
Eight OPEC+ countries agreed on Thursday to advance their plan to phase out oil output cuts by increasing output by 411,000 bpd in May. The eight members of OPEC+ had been scheduled to raise output by 135,000 bpd in May as part of a plan to gradually unwind their most recent layer of output cuts. However, after a meeting of the eight countries held online on Thursday, the group announced it would increase output by 411,000 bpd in May. OPEC cited “continuing healthy market fundamentals and the positive market outlook.” OPEC said “This comprises the increment originally planned for May in addition to two monthly increments.” OPEC’s statement said the eight OPEC+ countries will meet on May 5th to decide on June output.
UBS analysts said the OPEC+ decision to advance the unwinding of its output cuts adds downside risk to crude prices, while the negative effect on global growth from U.S. tariffs could cut oil demand growth by 250,000 to 500,000 bpd, “close to half of its 2025 growth forecast of 1.1 million bpd at the upper end.” UBS sees increased downside risk for crude oil prices towards the lower end of the $55-$75/barrel WTI range.
Early Market Call – as of 9:30 AM EDT
WTI – May $61.66, down $5.28
RBOB – Apr $2.0441, down 12.08 cents
HO – Apr $2.0703, down 11.86 cents
