Crude oil prices stair-stepped lower for the sixth-straight day Apr. 8, 2025, on the heels of the OPEC+ announcement to increase output in September by more than 500,000 b/d and as traders ignore Pres. Trump’s threats of secondary tariffs on entities that purchase Russian oil. Across-the-board declines in crude and refined product inventories could not offset the bearish mindset. WTI’s high was $67.75/bbl Monday, with the low of $62.75 hitting Friday. Brent crude also stayed below $70/bbl, starting at Monday’s high of $69.40/bbl and descending to the weekly low of $65.50 by Friday. The WTI/Brent spread tightened to $3.50. Both grades looked to settle lower week-over-week.
The trade week started on a down note Sunday evening following the OPEC+ announcement that it would increase output next month by 547,000 b/d, more than expected, and finishing the return of the 2.2 million b/d cuts from 2 years ago. Prices saw some support when President Trump demanded that Russia agree to a ceasefire by week’s end or he would order “secondary” tariffs on those buying Russian oil including, India. Given the President’s tendency not to fully follow through with his threats, the market pushed that risk aside. Meanwhile, India has steadfastly committed to continue to buy Urals crude as an important source of energy for their rising economy despite Trump’s imposition of an additional 25% tariff on their imports to the US. However, India’s state-owned refiner, India Oil Co., bought spot cargoes this week from the US, Brazil, and Libya in the event they will have to cut Russian supply. Of course, the flip side of increased tariffs is one of concern regarding economic contraction that the increased costs could cause which is bearish for energy demand.
Reuters is reporting that Chevron has three tankers heading for Venezuela as they have been given permission to restart crude purchases there. The Venezuelan grade is preferred by US refiners who are geared for heavier feedstocks. Meanwhile, Mexico has lifted its ban on hydrofracturing in an effort to combat declining production rates. Argentina’s Vaca Muerta shale play continues to increase the country’s output, which reached 770,000 b/d last month. Nigeria reached 1.8 million b/d in July. And, in a letter to shareholders, Diamondback Energy stated that, at current oil price levels, US shale oil production has likely peaked, and the Permian-focused producer trimmed its 2025 capital expenditures by $100 million.
The US Energy Information Administration’s (EIA) Weekly Petroleum Status Report indicated that commercial crude and refined product inventories both fell last week while US production held flat. Refineries ran at their highest level yet this summer.
Initial claims for unemployment benefits were 226,000 last week, higher than expected. Meanwhile, US continuing jobless claims rose 37,000 in the last week of July to 1.97 million, the highest level since November 2021. Orders from US factories fell 4.8% in June, less than the forecasted 4.9%. Despite mostly weak US economic data, all three major US stock indexes were higher on the week as investors eyed interest rate cuts by global central banks which have increased overall monetary supply. The US dollar is lower week-on-week, providing somewhat of a floor for oil prices.