Crude oil futures tumbled over the past week, falling more than 6% as concerns over weakening global demand and a resurgent supply outlook weighed on sentiment. West Texas Intermediate (WTI) briefly hit a low of $56.39 before recovering to $59.24 by Thursday’s close. While dip-buying provided short-term support, the underlying market tone remains distinctly bearish as fundamental pressures intensify.
China Demand Slowdown Fuels Bearish Sentiment
Fresh economic data from China delivered a major blow to oil bulls. The country’s official manufacturing PMI slumped to 49.0 in April, signaling contraction and raising alarm over the health of the world’s largest crude importer. Of particular concern was the new export orders index, which plunged to its weakest level since 2012 outside of pandemic anomalies. Analysts responded by slashing full-year growth forecasts to just 3.5%, casting doubt on sustainable Chinese demand.
Though China’s March crude imports surged, analysts argue this was driven more by pre-sanctions stockpiling than any uptick in consumption. With Beijing’s fiscal stimulus measures struggling to gain traction, traders are increasingly skeptical of China’s ability to sustain meaningful crude demand growth in the near term.
Trade War Escalation Undermines Global Oil Demand Expectations
U.S.-China trade tensions are exacerbating the fragile demand picture. A fresh round of tariffs and retaliatory measures has heightened fears of a global slowdown, with the U.S. economy already contracting in Q1—the first quarterly drop in three years. Analysts warn that President Trump’s tariff strategy is significantly disrupting global trade flows and could push the global economy toward recession, directly pressuring oil consumption.
Barclays and other banks have already downgraded oil demand projections, with Brent forecasts reduced by $4 to $70 per barrel. As confidence in a robust economic recovery falters, so too does support for higher oil prices.
EIA Reports Mixed Inventory Data as Supply Stays Ample
On the supply front, the latest U.S. Energy Information Administration (EIA) data painted a mixed but largely bearish picture. Crude oil inventories fell by 2.7 million barrels to 440.4 million barrels last week—defying analyst expectations for a build of 429,000 barrels. However, inventories at the Cushing, Oklahoma, hub rose by 682,000 barrels, and distillate stockpiles increased by 900,000 barrels, against forecasts for a draw.
Gasoline stocks dropped more than expected—falling 4 million barrels—but refinery activity continued to ramp up, with crude runs rising by 189,000 bpd and utilization climbing to 88.6%. Net U.S. crude imports also fell sharply by 663,000 bpd, pointing to a refined product market that is still structurally oversupplied despite headline crude draws.
OPEC+ Output Plans Keep Pressure on Prices
The broader supply outlook continues to tilt bearish. Several OPEC+ producers are reportedly pressing for accelerated output increases in June, as frustration mounts over internal quota breaches by members like Kazakhstan and Iraq. Saudi Arabia, the bloc’s de facto leader, has signaled it can tolerate prolonged low prices and is unwilling to cut production further—signaling a strategic pivot toward defending market share over price.
Russia, while less aggressive, is unlikely to block moderate increases. With OPEC+ still holding back over 5 million bpd and internal cohesion fraying, traders are bracing for a more aggressive unwind of production cuts that could flood an already soft market with excess barrels.
Geopolitical Risks Offer Only Temporary Relief
Heightened geopolitical tension around Iran briefly lifted crude prices midweek. WTI and Brent rebounded nearly 2% on Thursday after President Trump threatened to impose secondary sanctions on buyers of Iranian oil. The comments followed a postponed round of nuclear talks, adding to uncertainty over Middle East supply flows.
Analysts estimate that effective enforcement of these sanctions could remove up to 1.5 million bpd from global supply. However, this potential disruption is being counterbalanced by OPEC+ production flexibility and rising inventories, limiting the upside potential for prices driven by geopolitics alone.
Weekly Light Crude Oil Futures
Trend Indicator Analysis
The main trend is down according to the weekly swing chart. A trade through $71.64 will change the main trend to up. The minor trend is also down. A trade through $64.87 will change the minor trend to up. This will shift momentum to the upside.
The long-term range is $52.45 to $84.90. Its 50% level is $68.67. This is major resistance. Trading on the bearish side of this key level is also a sign of weakness. Additional resistance is the 52-week moving average at $68.79.
The short-term range is $71.64 to $54.48. Its pivot at $63.06 is controlling the near-term direction. Last week, sellers drove the market to its weakside, triggering the sharp break.
The minor range is $54.48 to $64.87. Its pivot is $59.67. Crude oil is currently on the weakside of this indicator.
Weekly Technical Forecast
The direction of the Weekly Light Crude Oil Futures market the week ending May 9 is likely to be determined by trader reaction to $59.67.
Bullish Scenario
A sustained move over $59.67 will signal the presence of counter-trend buyers. If this creates enough momentum, we could see a possible near-term rally into the major pivot at $63.06.
Bearish Scenario
A sustained move under $59.67 will indicate the presence of sellers. This will leave the market vulnerable to a plunge into the April low at $54.48.
Bearish Oil Prices Forecast as Supply-Demand Balance Breaks Down
The fundamental backdrop for crude oil remains bearish. Demand is deteriorating under the weight of China’s economic slowdown and trade war escalation, while supply resilience from OPEC+ and the U.S. continues to pressure prices. The latest EIA data, despite some bullish headlines, confirms ample domestic supply and robust refining activity.
However, the market remains prone to short-covering rallies—especially around geopolitical flashpoints such as Iranian sanctions or surprise OPEC+ maneuvers. These moves may provide temporary relief, but without a sustained improvement in demand or a decisive policy shift from major producers, they are unlikely to change the overall direction.
Traders should maintain a cautious stance. Unless WTI reclaims and holds above $59.67 this week on the back of stronger fundamentals, the oil prices forecast continues to favor further downside. With structural imbalances deepening, rallies may offer better opportunities to sell than signals of a lasting recovery.
Although the market may be vulnerable to short-covering rallies as it nears value areas, the longer-term trend will remain decisively lower as long as it remains under the 52-week moving average at $68.78.