- Crude oil prices rose slightly amid trade talk optimism.
- The long-term trend in oil is shaky due to oversupply concerns and reduced demand.
- A shift in Saudi Arabia’s policy suggests a long-term bearish outlook.
Crude oil prices rose on Thursday after President Trump announced a major trade agreement with the UK. It sparked a reduction in tariff tensions. The Brent crude oil surged to $61.40, while WTI rose to $58.00, primarily due to trade talk optimism.
Despite the brief recovery, oil prices stay under pressure, licking wounds of steep losses in 2025. Sluggish global demand and increased supply weighed heavily on the market, keeping oil under pressure.
Yet, despite this brief recovery, oil prices remain under significant pressure, having suffered steep losses in 2025. Sluggish global demand and increasing production have weighed heavily on the market, keeping crude prices near four-year lows. Uncertainties keep market sentiment cautious.
The Federal Reserve kept interest rates unchanged in the last meeting yesterday but warned of inflationary pressures and trade wars. Fed Chair Powell highlighted concerns regarding long-term impact of tariffs, resulting in stagflation.
Adding more fuel to the bearish momentum, the recent US inventory data showed soaring gasoline stocks, that revealing a declining demand. On the other hand, the US dollar also gained, making oil expensive for global buyers.
The IEA expects global oil demand to surge by 11.3 mn barrels per day by the third quarter. However, the demand could be offset by fresh supply entering the markets.
In a recent plan, OPEC+ announced it would raise output by 1 million barrels per day during April and June, with a probable 400k bpd rise in July. Saudi Arabia’s shift of policy from output cuts to expansion is significant for the crude oil markets.
Moreover, new supply from Guyana and Brazil is expected to join the stream later this year, adding more to the supply concerns. US shale companies have signaled a slowdown in production amid price decline. However, this could offer a temporary offset in global output.
These dynamics reflect a smile shape of crude oil futures curve which shows short-term tightness but long-term over supply by end of the year. Brent July futures trade at a premium to October contracts but flips from November onward contracts. It indicates the market participants expect the balance to deteriorate this year.
Trade deal related developments remain the key. US treasury Secretary Scott Bessent is expected to meet China’s top officials on May 10 in Switzerland. Though trade talk optimism lies, Trump’s statement regarding no urgency to lower tariffs keeps the markets uncertain.
