Oil prices gained more than $1 per barrel on Tuesday, marking a rebound after a decision by OPEC+ to accelerate output boosts led to a price decline in the previous session. Brent crude futures rose $1.15 to $61.38 per barrel, while U.S. West Texas Intermediate crude added $1.11 to $58.24 per barrel. This was the first increase after six consecutive declines, which had driven both benchmarks to their lowest levels since February 2021. The slump was driven by OPEC+’s decision to continue increasing oil production for the second consecutive month, raising concerns about an oversupply in the market.
Yeap Jun Rong, a market strategist at IG, noted that the rebound in oil prices was more technical than fundamental. He highlighted ongoing challenges, including changes in OPEC+’s production strategy, uncertainty surrounding demand due to risks related to U.S. tariffs, and downward revisions in price forecasts. These factors have contributed to a decline of over 10% in oil prices over the past six sessions, and prices have fallen more than 20% since April, driven by expectations that production will surpass consumption. The uncertainty surrounding global economic growth, partly triggered by U.S. President Donald Trump’s tariff policies, further compounded these worries.
However, the return of Chinese market participants after a five-day public holiday provided some support for oil prices. As the world’s largest importer of oil, China’s involvement in the market was expected to boost demand, with buyers likely taking advantage of the current low prices. Additionally, economic data showing growth in the U.S. services sector also provided some optimism. The Institute for Supply Management (ISM) reported that its nonmanufacturing purchasing managers index (PMI) rose to 51.6 in April, up from 50.8 in March, indicating an expansion in the U.S. services sector, a key driver of oil demand.
Despite the modest price recovery, analysts remain cautious. The U.S. Federal Reserve is expected to keep interest rates unchanged as trade tensions continue to create economic uncertainty. Barclays and Goldman Sachs both lowered their oil price forecasts, citing concerns about the long-term outlook. Barclays reduced its 2025 Brent crude forecast to $70 per barrel, while Goldman Sachs adjusted their forecast downward due to expected further increases in OPEC+ production.
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