OPEC Production Increased: Eight OPEC+ countries unexpectedly agreed to increase oil output by 411,000 barrels per day in May, well above the originally planned 135,000 bpd hike. The decision came after an online meeting, with OPEC citing strong market fundamentals and a positive outlook. The group emphasized that the gradual production increases could be paused or reversed depending on market conditions. OPEC+ will meet again on May 5 to decide on June output, while 3.65 million bpd of other cuts remain in place until the end of next year.
Tariffs: President Donald Trump announced sweeping import tariffs on major trading partners, intensifying trade tensions and raising concerns about global economic prospects. While financial markets and oil prices initially declined, the U.S. energy sector found relief in the exemption of oil, gas, and refined products from the tariffs. The U.S. remains a dominant force in global energy markets, with strong LNG and crude exports, making it unlikely that trading partners will retaliate with energy tariffs. Countries affected by the trade war may even increase U.S. energy imports to ease tensions, as seen in the EU’s growing LNG purchases. In the long run, the tariffs could spur domestic investments in key economies, potentially increasing global demand for oil and gas.
Inventory Report: U.S. crude oil inventories rose by 6.2 million barrels last week, contrasting with analyst expectations of a 2.1 million-barrel draw. Refinery utilization declined to 86% as maintenance season continued, with crude runs falling by 192,000 bpd. Gasoline demand remained weak, with product supplied dropping to 8.5 million bpd, while distillate stocks saw a slight build instead of the expected draw
Market Overview: Oil prices are falling sharply on Thursday, dropping over 6% as OPEC+ accelerates its output increases, adding 411,000 barrels per day to the market in May, up from the previously planned 135,000 bpd. This decision comes amid concerns following U.S. President Trump's announcement of new tariffs, which may fuel a global trade war and curb economic growth and fuel demand. U.S. crude inventories rose by 6.2 million barrels last week, surprising analysts who expected a draw. With tariff discussions continuing, market volatility is expected to persist, as countries may respond with countermeasures and retaliatory actions.
Heating Oil Daily Chart
Heating oil is experiencing a sharp drop this morning, currently trading at $2.1771, breaking below key support levels. The 100-day SMA at $2.3193, 30-day at $2.2702, and 10-day at $2.2729 suggest a bearish outlook as the price sits well below these averages. The RSI at 38.57 signals the market is approaching oversold territory, but further downside remains possible if support at $2.17 fails. Traders will be watching for OPEC guidance and broader market sentiment to determine whether this selloff stabilizes or extends toward $2.10.
Oil prices plunged on Thursday, marking their steepest percentage drop since 2022, as OPEC+ unexpectedly agreed to accelerate production increases just a day after President Trump announced broad new import tariffs. WTI crude settled at $66.95 per barrel, down 6.64%, as the market reacted to fears of weakening global demand and the potential for retaliatory trade measures. OPEC+ now plans to add 411,000 barrels per day in May, significantly more than the originally planned 135,000 bpd, further pressuring prices. Concerns about a global economic slowdown intensified after the U.S. Energy Information Administration reported an unexpected crude inventory build of 6.2 million barrels. While oil, gas, and refined products were exempt from the new tariffs, broader trade disruptions could still impact energy demand, refining margins, and industrial fuel consumption. Analysts anticipate continued volatility, with UBS cutting its oil price forecast by $3 per barrel for 2025-26, citing economic uncertainty. Markets are now bracing for possible retaliatory tariffs and their potential impact on fuel demand and broader economic stability.
