May 09, 2025 (MarketLine via COMTEX) --
Crude oil prices increased overall during the week amid signs of easing trade tensions between the US and China after the two countries scheduled a meet later in the week to talk over tariffs. Prices also received support from a new deal between the US and the UK that might facilitate an increase in bilateral trade of diverse goods. Besides, a surge in exports from China also lent support to oil prices. Elsewhere, Israel-Houthi tensions flared again in the Middle East, giving additional support to prices during the week. However, gains in prices were somewhat eroded after the OPEC+ group increase its collective production target for June 2025 by a sizeable volume. The consortium also signalled its intention to persist in raising output at comparable levels in the future, regardless of potential downturns in global economic growth. The upside to prices was also somewhat restrained by the US Federal ReserveaEUR(TM)s decision to maintain interest rates due to lack of clarity over economic outlook amid abrupt changes in US import tariffs over the recent weeks.
Some key factors that led to changes in crude oil prices this week are as follows:
Oil prices declined on Monday, weighed down by concerns over a potential crude oil oversupply in global markets after the OPEC+ confirmed a large output hike for June 2025. The group will lift its collective output by 411,000 barrels per day (bpd) next month, taking the cumulative increase for this quarter to around 960,000 bpd. Thus, the group is rolling back nearly half of its planned output cuts of 2.2 million barrels that were implemented since 2022. Moreover, the group also hinted at the possibility of unwinding the remainder of its production cuts by October 2025 if non-compliant countries continued to miss their targets. This was in reference to members, such as Kazakhstan and Iraq, which had produced above their quotas in the past few months.Oil prices rose on Tuesday, supported by simmering tensions in the Middle East after Israel conducted retaliatory strikes on Yemen following a Houthi missile attack on the country’s major international airport of Tel Aviv. The strikes caused considerable damages to airport in the Yemeni city of Sanaa as well as other installations within the country. Prices also received some support from prospects of the European Union planning additional sanctions on Russia’s energy exports, particularly the shadow fleet of tankers that help transport its cargo around the world.Oil prices declined again on Wednesday, after the US Federal Reserve left the country’s benchmark interest rates unchanged following its fiscal review. The central bank flagged economic uncertainty in the country while explaining its policy decision and also cited a growing risk of unemployment and high inflation in the current macro environment. These comments led to worries over a potential slowdown in crude oil and natural gas demand in the country and weighed down prices. Prices were also weighed down by the prevailing US-China trade tensions that had prompted the two countries to raise their import tariffs on each other’s goods. However, these worries subsided a little after the two countries agreed to hold trade talks in the coming days to find a solution, which somewhat contained the slide in prices.Oil prices gained on Thursday and then maintained that trend on Friday, supported by expectations that the US and China would sort out their tariff dispute through discussions on May 10, 2025. Such a development was bound to ease trade tensions between the two countries and prop up energy consumption in these markets. Prices also received support from a notable increase in its China’s exports in April 2025. As per the country’s customs data, exports rose 8.1% year-on-year last month while imports were largely flat, which is a sign of an expanding economy. Additionally, the US signed a new trade deal with the UK, indicating a boost to these economies, giving further fillip to prices.
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COMTEX_465558669/2227/2025-05-16T15:58:31
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