WTI Drops Below $61 as Markets Brace for OPEC+ and Economic Headwinds

Crude oil prices extended their downward slide early this week, brought down by weakening demand expectations and intensifying geopolitical tensions. West Texas Intermediate (WTI) crude fell to $60 per barrel on Tuesday, nearing a two-week low and down $1.13 on the day. Brent crude followed suit, dropping $1.28 to $64 per barrel. The declines reflect growing concern that the ongoing U.S.-China trade war could trigger a broader economic slowdown, reducing global oil consumption from the world’s two largest economies.

As prices adjust to reflect weaker demand, it could force US producers to cut output. Barclays has already revised its 2025 Brent price forecast down by $4, now projecting $70 per barrel. It expects a 1 Mbpd surplus this year, driven by soft demand and more lenient OPEC+ supply policies.

At the same time, OPEC+ members are expected to propose a second consecutive monthly production hike at their May 5 meeting. Kazakhstan, in particular, is drawing attention as it boosts oil exports, up 7% year-over-year in Q1, thanks to increased flows through the Caspian pipeline. The combination of rising supply and softer demand paints a challenging picture for the second half of the year.

Closer to home, macroeconomic concerns are further amplified by a sharp slowdown in U.S. port activity. FreightWaves reports inbound traffic is down approximately 30%, with operators confirming a 20–25% drop at California ports. This slowdown is estimated to be reducing over-the-road trucking volumes by 5–6%, a trend that could weigh heavily on diesel demand in the coming weeks. The ripple effects could extend to labor markets, with large corporations under watch for potential staffing cuts, which could have broader implications for inflation and Federal Reserve policy decisions.

In 2024, U.S. imports of petroleum products fell by 210,000 bpd to an average of 1.8 Mbpd, marking a significant year-over-year decline. The drop spanned across all major transportation fuels, including gasoline, diesel, and jet fuel. Motor gasoline remained the largest import segment at 651,000 bpd—down 75,000 bpd from 2023—even though domestic consumption remained steady. The decrease in imports contributed to falling gasoline inventories, particularly in the Northeast.

Despite importing large volumes of gasoline, the U.S. maintained its position as a net exporter, sending 226,000 bpd more abroad than it brought in. This is primarily driven by strong refining capacity along the Gulf Coast, where most exports originate. However, infrastructure limitations continue to constrain supply to distant U.S. regions, necessitating imports, especially along the East Coast.

Canada remained the top supplier of both gasoline and distillate, with 95% of diesel imports coming from its northern neighbor. Jet fuel imports also dropped, with South Korea accounting for 71% of those volumes, primarily directed to the West Coast.

Overall, the fuel market is navigating a turbulent environment marked by supply-demand imbalances and shifting trade dynamics. All eyes now turn to the OPEC+ meeting and U.S. economic indicators for signals on where prices head next.