Oil Market Report - April 2025

The global crude oil market rubbed in April 2025 through one of its most turbulent months in recent years, experiencing a sharp selloff, with both Brent and WTI front-month futures posting month-to-date losses of more than 13% relative to their March-end levels.

EXECUTIVE SUMMARY

The global crude oil market rubbed in April 2025 through one of its most turbulent months in recent years, experiencing a sharp selloff, with both Brent and WTI front-month futures posting month-to-date losses of more than 13% relative to their March-end levels. The prices were heavily pressured by a combination of escalating U.S.-China trade tensions resulting in a plunge in global equity markets, unexpected production increases from OPEC+ members, and renewed fears of a global economic slowdown due a “tariff war” started by Trump’s administration. Brent fell from $74.77 to $64.79 per barrel (as of April 28), marking an absolute drop of $9.98, equivalent to a 13.4% loss, while WTI slid from $71.48 to $62.05 per barrel, losing $9.43 or 13.2% from its March-end level. Both grades exhibited high volatility throughout the month, with pronounced multi-day selloffs in early April, a temporary recovery mid-month driven by geopolitical tensions in Yemen, and a renewed downturn in the final sessions. On a monthly-average basis, Brent futures averaged approximately $65.89 per barrel during April 2025, compared to a March average of around $73.05, reflecting a month-on-month contraction of nearly 9.8%. WTI futures posted a monthly average of roughly $61.77 per barrel, down from an average of about $69.24 in March, a similar decline of around 10.8%. Overall, the April performance highlighted persistent bearish sentiment in the oil market, driven by oversupply risks and weakening global demand outlooks.

The technical outlook for May 2025 remains heavily tilted to the downside as both Brent and WTI futures have developed classic bearish formations through April 2025. First, the dramatic price collapse in early April following the formation of local highs on April 2 — $75.47 for Brent and $72.28 for WTI — and the subsequent failure to fully recover back to those levels throughout the month point to the confirmation of a strong bearish pattern, typically signaling a more prolonged downward trend. Furthermore, the inability of Brent to sustain above the psychologically important $70 per barrel level after the April 3–4 breakdown, and WTI’s similar failure to regain the $65–66 zone, signals that both benchmarks are now trading in lower ranges, confirming a clear downtrend channel that has been established. The moving averages also align with the bearish view: as of the end of April, both Brent and WTI front-month futures are trading well below their 50-day and 200-day moving averages. Moreover, on the weekly charts, a bearish engulfing pattern was formed during the first full trading week of April for both Brent and WTI. Overlaying this with the fundamental context — increased OPEC+ production starting in May, further global demand projections downgrades, expectations of a global oil surplus, and weak economic momentum caused by U.S.-China tensions — the risks to crude oil prices clearly remain skewed to the downside throughout May. Thus, it is highly probable that Brent crude futures could test support levels around $62–63 per barrel during May, with potential for temporary spikes down to $60 in case of further adverse news flow or deteriorating macro indicators. For WTI, critical support lies around $59–60 per barrel, and breaching this zone could open a path toward $57–58.

The International Energy Agency reported world oil supply to grow by 590 kbd to 103.6 mbd in March 2025, implying an increase of 910 kbd year-over-year, with non-OPEC+ leading both monthly and annual gains. In early April, however, global oil markets were roiled by a barrage of trade tariff announcements resulting in crude oil prices to plunge to their lowest levels in four years. This significant drop in oil prices rattled the US shale patch, with firms arguing they need $65 per bbl on average to profitably drill new light tight oil wells, according to the latest Dallas Fed Energy Survey. New tariffs may also make it more expensive to buy steel and equipment, further discouraging drilling. Along with the impact of Chinese tariffs on imports of US ethane and LPG, this has forced the IEA to revised its US oil supply forecast for this year to the downside, reducing it by 150 kbd, with growth now assessed at 490 kbd. However, the agency believe that conventional oil projects remain on track, with total non-OPEC+ supply expected to rise in 2025 by 1.3 mbd. In result, the IEA has cut its expectations of global supply growth for 2025 by 260 kbd to 1.2 mbd, while still forecasts global oil production in 2026 to rise by 960 kbd, with offshore projects taking the lead.

The U.S. Energy Information Administration, conversely, stated that global oil production registered a moderate contraction within the same month, falling by 185 kbd from February levels, marking a 0.2% month-over-month decline. This was the sharpest monthly rate of decrease recorded in the past three months, signaling certain pressures on the supply side. Despite the short-term softness, world production remained firmly ahead of last year’s pace, rising by 1.02 mbd, or +1.0% YoY, compared to March 2024. However, it is notable that this year-over-year growth was the slowest since December 2024, pointing to a cooling momentum. Relative to the five-year seasonal average, world production was 4.19 mbd higher, underscoring a resilient longer-term recovery, with a 4.2% advantage. OPEC continued to outperform, steadily increasing its footprint in the global supply landscape, driven largely by gains in both crude and NGLs. Meanwhile, non-OPEC producers struggled with sequential declines, particularly in crude oil output, although their longer-term production metrics remained solidly above average.

According to cartel’s own data, overall OPEC crude oil production recorded a decline of 84 kbd in March 2025 compared to February, marking a 0.3% month-on-month decrease. This represented the most rapid monthly contraction observed over the past six months. On an annual basis, production increased by 172 kbd, or +0.6% YoY, continuing a four-month streak of year-over-year growth. Nevertheless, this annual expansion was the slowest recorded in the last three months. Compared to the five-year average for March, OPEC crude output lagged by 657 kbd, translating into a 2.4% drop.

Increased volatility in crude oil prices in early April was also fueled the surprise decision of eight OPEC+ countries to triple agreed in March 2025 production target increases for May 2025 to 411 kbd. Interestingly, the group referred to “the continuing healthy market fundamentals and the positive market outlook” as the reason behind this step, completely confusing the market. However, the actual increase may be much smaller, as a number of countries, including Kazakhstan, the United Arab Emirates and Iraq are already producing well above their targets. Notably, Kazakh crude oil output reached a record high of 1.8 mbd following the start-up of the Chevron-operated Tengiz oilfield expansion project. This puts Kazakhstan some 390 kbd above its OPEC+ output quota. In addition, several countries in the group have committed to compensate for earlier overproduction in the coming months, which may negate most of the increase.

Total non-OPEC oil output experienced a moderate contraction in March 2025, as per EIA’s data, declining by 390 kbd from the previous month, equivalent to a 0.5% MoM decrease. This marked the sharpest month-on-month decline recorded in the past three months. Despite the recent monthly weakness, on a year-over-year basis the production maintained a modest expansion, rising by 410 kbd, or 0.6% YoY, compared to March 2024. However, it is worth noting that this represented the slowest pace of annual growth within the last three months. In a broader historical context, reported production levels stood 3.03 mbd above the five-year seasonal average, a 4.5% increase, highlighting the resilience of non-OPEC output in a longer-term view.

Total oil production in the United States recorded a modest contraction in March 2025, slipping by 46 kbd compared to February, equating to a 0.2% month-over-month decline. Despite this setback, the broader trend remained resilient, with year-over-year output expanding by 547 kbd, a gain of 2.4% versus March 2024. This marked the sixth consecutive month of annual growth, although it represented the slowest pace of expansion within the last three months. When placed against the five-year seasonal average, the March 2025 output stood 2.46 mbd higher, corresponding to a notable 12.0% increase, underscoring a strong structural improvement in oil production levels in the country relative to historical norms. Although overall U.S. oil production remained on a solid upward trajectory on an annual basis, March 2025 saw clear signs of moderation across key components, suggesting a potential stabilization phase after several quarters of strong expansion.

Meantime, U.S. shale oil production staged a meaningful rebound. The output rose by 66 kbd from February levels, equivalent to a 0.6% MoM increase, reaching the highest volume recorded in the past three months. This uptick reversed a prior three-month decline and marked the fastest monthly growth rate in the last five months. Year-over-year, shale oil output grew by 174 kbd, or +1.7% YoY, extending an impressive 47-month streak of annual increases. However, it was also the slowest yearly growth rate seen in over a year. Against the backdrop of historical performance, shale oil output in the United States stood 1.07 mbd above the five-year March average, equating to an 11.6% surplus.

The International Energy Agency revised down its estimate of global oil demand growth for 2025 by another 300 kbd to just 730 kbd, as escalating trade tensions have negatively impacted the economic outlook. While imports of oil, gas and refined products were given exemptions from the tariffs announced by the United States, concerns that the measures could stoke inflation, slow economic growth and intensify trade disputes weighed on oil prices. With negotiations and countermeasures still ongoing, the situation is fluid and substantial risks remain. In this regard, the IEA have lowered the economic growth assumptions that underpin forecasts, leading to a 400 kbd reduction in expected oil demand growth for the remainder of the year. The downgrade also comes on the heels of robust oil consumption in 1Q25, which rose by 1.2 mbd year-on-year, its strongest rate since 2023. The agency expects the growth to ease further to 690 kbd in 2026 amid a fragile macroeconomic environment and as electric vehicles take up a larger share, with risks to the forecasts remain rife given the fast-moving macro backdrop.

According to the U.S. Energy Information Administration, March 2025 marked a period of notable deceleration in global oil consumption growth, as demand slipped by 1.86 mbd on a month-over-month basis, representing a 1.8% MoM decline. Despite this monthly contraction, the broader year-over-year trend remained positive, with global oil consumption rising by 1.16 mbd, a 1.1% YoY increase compared to March 2024. However, this was the slowest pace of annual growth recorded in the last four months, signaling potential softness in underlying macroeconomic drivers, although the 10th straight month of expansion in yearly terms. Nonetheless, demand stood firmly above historical benchmarks, exceeding the five-year average for March by a substantial 5.18 mbd, or +5.3%, underscoring the resilience of global energy needs in a post-pandemic, rebalancing economy.

Global observed oil inventories rose by 21.9 mb to 7 647 mb in February 2025, as per the most recent data of the International Energy Agency, but still hovered near the bottom of the five-year range. Crude, NGLs and feedstocks surged by 41.2 mb, of which OECD onshore stocks accounted for 14.1 mb. Oil products fell by 19.2 mb as a 34.2 mb reduction in the OECD overwhelmed gains in oil on water. Preliminary data indicate global oil stocks increased further in March 2025, led by crude builds in the non-OECD and oil on water.

As for January 2025, detailed statistics for which were also revealed by the IEA, total OECD oil inventories also climbed during that month, extending their earlier upward trajectory and improving a strengthening in momentum. Total stocks rose by 4.0 million tons from December, representing a 0.9% MoM increase. This brought inventories to their highest level since August 2024, solidifying a three-month streak of monthly gains. The pace of this monthly rise was the most pronounced since April 2024, suggesting both a certain easing of global supply-demand balance and seasonal accumulation. On a year-over-year basis, OECD stocks were up by 1.6 million tons, or +0.4% YoY, continuing a three-month trend of annual increases. Notably, this was the strongest yearly growth rate since June 2024. However, despite the recent gains, OECD inventories remain significantly below historical norms — January’s total sat 36.5 million tons beneath the 5-year average for the month, reflecting a 7.2% deficit and highlighting persistent tightness on the global oil market.

U.S. total oil inventories posted a net decline of 10.50 mb in March 2025 from the prior month, reflecting a month-over-month contraction of 0.6%. This reduction brought the overall oil stockpiles in the country to their lowest level in nearly a year, marking the third consecutive monthly drop. On a year-over-year basis, however, the inventories were 15.30 mb higher, recording an increase of 1.0% YoY, though this increase represented the slowest annual growth rate seen in the past four months. Importantly, the volume of the stocks remains markedly below historical norms—155.88 mb, or -8.8%, lower than the five-year average for March—highlighting the persistent structural tightness in supply despite yearly gains. March 2025 performance of oil inventories painted a complex picture: strategic reserves are gradually rebuilding, yet commercial inventories—particularly refined products and NGLs—remain deeply constrained relative to both recent history and long-term averages.

The same time, crude oil inventories at Cushing, Oklahoma storage hub, registered a decline of 0.62 mb on a monthly basis, equating to a 2.4% MoM contraction relative to February. The annual perspective underscored a more substantial erosion in Cushing's storage volumes. Compared with March of the previous year, inventories fell by 8.09 mb, representing a pronounced 24.4% YoY decline. This marked the 5th consecutive month of annual contraction. Moreover, the reported stock levels remain materially below historical norms. When benchmarked against the five-year seasonal average for March, the latest figure was lower by 11.23 mb, or roughly -30.9%.

Global floating oil inventories recorded a sharp and accelerated drawdown in March 2025, with total stocks fell by 14.86 mb compared to the previous month, according to the data of Vortexa, marking a substantial 20.5% MoM decline. This drop brought the global inventory level to its lowest point in more than five years, a 63-month low, underscoring the scale of the contraction. The monthly contraction has now persisted for two consecutive months, but what is particularly noteworthy is the pace of this latest decline—it was the steepest MoM drop observed in the past seven months. On a year-over-year basis, the picture was equally dramatic: inventories fell by 20.56 mb, representing a 26.3% YoY plunge from March 2024, representing the largest annual decline in the past seven months. Comparing to the five-year seasonal average for March, global floating inventories of oil were down by 27.7 mb, or -32.4%.

AC - Oil Market Report - Apr-2025.pdf

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