Good morning!
Happy Friday! This past week was yet another roller coaster for global crude oil markets. Prices started off under pressure but managed to rebound by the end of the week. Geopolitical headlines, economic data, and trade developments all collided to create a very complex and unpredictable trading environment. The biggest driver of crude oil volatility continues to be the escalating trade conflict between the United States and China. The ongoing uncertainty is weighing heavily on global markets, and it’s directly influencing crude prices. President Trump’s latest round of sweeping tariffs triggered immediate market reactions. While oil, gas, and refined products were excluded from the tariffs, the broader implications—especially for inflation and economic growth—caused concern. On April 15, Trump announced he was considering adjustments to the existing 25% tariffs on imported vehicles and auto parts from Canada, Mexico, and other regions, which gave crude prices a little lift. But the inconsistency in trade strategy has many traders on edge. OPEC even revised its global oil demand forecast lower for the first time since December. Fed Chair Jerome Powell didn’t help matters, stating that the latest round of tariffs is “larger than anticipated,” and warning of significant economic consequences.
China didn’t hold back either. On April 11, they responded with a retaliatory 34% tax on American imports, further confirming fears of a full-blown global trade war. That move initially deepened the selloff in oil markets, as traders priced in the possibility of decreased demand from the world’s largest crude importer. On top of that, recession warnings are starting to ramp up. Goldman Sachs now sees a 45% chance of a U.S. recession within the next year and has revised its oil price outlook lower. JPMorgan has gone even further, projecting a 60% chance of a recession both in the U.S. and globally. Meanwhile, OPEC+ stirred the pot with its announcement that they will be increasing production much faster than anticipated. The group plans to bring an additional 411,000 barrels per day to market in May—well above the original schedule of 135,000 bpd. The decision comes at a time when sentiment is already shaky, and it’s adding even more downward pressure to prices. OPEC+ ministers also met over the weekend to stress the importance of sticking to quotas, and they’ve asked overproducing members to submit correction plans by April 15.
Major banks responded to all this by cutting their crude oil price forecasts. HSBC dropped their 2025 Brent forecast from $73 to $68.50 per barrel and 2026 from $70 to $65. They also lowered demand growth expectations for 2025 to 0.7 million barrels per day. Goldman Sachs now expects Brent to average $66 in 2025 and $58 in 2026. BofA came in with $65 and $70 for those years, and JPMorgan echoed the downward revisions. The EIA also updated its outlook, now seeing Brent crude at $68 for 2025 and $61 for 2026—down $6 and $7 per barrel from prior projections. That outlook came alongside the latest inventory data, which showed crude oil inventories in the U.S. sitting 6% below the five-year average. Gasoline inventories are 1% below average, while distillates are 11% below. The drop in supply is tied to a continued decrease in active rigs. The Permian Basin had its worst one-week rig drop since 2023, and overall U.S. rig counts are now at the lowest since 2022. Refinery utilization has also dipped below 85%, mostly due to widespread maintenance.
There was some positive news late in the week. Chinese crude oil imports for March were up nearly 5% year-over-year, with Iranian shipments jumping ahead of possible tighter sanctions. That data helped put a bit of a floor under crude prices. Meanwhile, oil producer Maurel & Prom reported production of over 30,000 barrels per day in Q1 2025—a 5% increase from Q4 2024—with an average sale price of $74.90 per barrel. So there are still some signs of profitability in the industry. After all the turbulence, WTI crude prices climbed from $61.53 on April 13 to $64.68 by April 17—a 5.1% gain in just five days. On April 17 alone, prices rose over 3.5%. That kind of move shows that while markets may have overreacted early in the week, the floor is still holding. Still, volatility remains the name of the game, and with so many moving parts—tariffs, OPEC+, inflation, and recession fears—there’s no clear direction in sight.
Locally, the Chicago Mercantile Exchange traded fairly in line with the NYMEX. Even though one of the major refineries is still in turnaround, prices didn’t blow out. Products remain tight in Wisconsin, but with demand a bit lower, the spot market didn’t overreact. I don’t expect any big changes at the pump in the coming week.
Propane inventories had a surprise draw this week according to the EIA report. Inventory levels are now lower than this time last year and below the five-year average. Spot and futures prices jumped quickly off last week’s lows. It’s a little hard to say how far summer fill prices will fall in this environment. Contract pricing for next heating season is currently looking about the same as last year. As always, we recommend topping off your tank this summer and locking in a portion of your propane needs early for the upcoming winter.
As always, if you have any questions, comments, or concerns, please don’t hesitate to give us a call. Have a great Easter weekend!
Best regards,
Jon Crawford