Week in Review: Bearish Momentum Builds with Price Drops Rooted in Uncertainty

Bearish sentiment stacked on top of already bearish sentiment this week as prices fell more than $4/bbl against intensifying geopolitical risks, signs of economic slowdown, and shifting supply dynamics. West Texas Intermediate (WTI) crude fell to $60/bbl by midweek and even further to $58/bbl this morning, while Brent crude dropped to $61 this morning, putting both benchmarks on track for the sharpest decline in a month. The downward trend reflects mounting bearish sentiment in the market, driven less by immediate fundamentals and more by a fear of what lies ahead.

A weakened demand outlook is a major contributor to the bearish sentiment. As trade tensions between the U.S. and China drag on, economic growth prospects for the world’s two largest oil consumers remain clouded. The U.S. economy contracted in Q1 for the first time in three years, after an import increase ahead of tariff hikes. Concerns are heightened that trade policies could spark a global recession, curbing oil demand across industries. While China has expressed willingness to resume trade negotiations, the situation remains fluid and uncertain.

Meanwhile, supply-side developments are adding more weight to the market’s bearish tone. Several OPEC+ countries, including Kazakhstan, are pushing for a second consecutive monthly output increase at the group’s May 5 meeting. Saudi Arabia, the group’s de facto leader, has signaled it’s willing to endure lower prices for longer and has little interest in further cuts. As non-OPEC+ supply continues to rise and global demand growth slows, the group may have no choice but to accept softer prices.

At the same time, domestic indicators suggest cooling demand in key sectors, such as U.S. port activity, reducing over-the-road trucking volumes by as much as 6%. Diesel demand, often viewed as a proxy for economic activity, could soften further if freight volumes continue to decline. Additionally, while U.S. crude inventories fell by 2.7 million barrels last week—driven by strong refinery and export demand—it wasn’t enough to offset broader concerns.

Refinery margins, which had climbed earlier in the year, fell in March, with utilization rates dropping from 93% to 86% by the end of Q1. East Coast refineries experienced the highest drop, falling to just 59% due to seasonal maintenance and major turnarounds. On the import/export front, U.S. imports of gasoline, diesel, and jet fuel declined year-over-year, though the country remained a net exporter thanks to robust Gulf Coast refining capacity. Still, infrastructure limitations continue to challenge supply distribution, especially in the Northeast.

The global trade of refined products is also shifting. Canada continues to dominate U.S. diesel imports, accounting for 95%, while South Korea leads jet fuel imports to the West Coast. However, total jet fuel imports have decreased, and overall U.S. petroleum product imports fell by 210,000 bpd in 2024, highlighting a broader trend of tightening supply chains.

Looking ahead, all eyes are on the upcoming OPEC+ meeting and U.S. economic data for direction. In short, while recent price drops may seem dramatic, they are more a reflection of fear than fact. Until the market sees clarity on OPEC+ policy, U.S.-China trade talks, and global demand recovery, volatility is likely to persist in the short term.

Prices in Review

Crude prices opened at $63.49 on Monday and trended downward through the week. The steepest drop occurred on Thursday, when prices hit $58.16, marking a weekly low. Prices opened on Friday at $58.99. Overall, crude fell by $4.50 per barrel this week, representing a 7.09% decrease.

Diesel prices opened at $2.1715 on Monday and experienced a steady decline throughout the week. The sharpest drop occurred on Thursday, when prices fell to a weekly low of $2.0023. After a slight increase, diesel opened at $2.0051 on Friday. Overall, prices declined by $0.1664 per gallon for the week, representing a 7.66% decrease.

Gasoline prices opened at $2.1291 on Monday and declined steadily throughout the week, reaching a low of $2.0238 on Thursday. A slight increase occurred on Friday, with prices opening at $2.0390. Overall, gasoline fell by $0.0901 per gallon this week, marking a 4.23% decrease.