Oil Slumps as Traders Await Next Moves in China, Economic Data

(Bloomberg) -- Oil sunk as traders parsed economic data from the US and the latest signals out of the trade war, including China’s efforts to support its tariff-hit economy.

West Texas Intermediate fell by as much as 2.4% to trade below $62 a barrel, as US equities weakened amid a selloff in big tech and a report showed that manufacturing activity hit the lowest since May 2020. Treasury Secretary Scott Bessent told CNBC that “all aspects” of the US government are in contact with China but that the onus is on Beijing to begin de-escalating the tariff fight with the US.

In China — the top crude importer — officials vowed to provide more support for exporters affected by US President Donald Trump’s tariffs, while denying any trade talks with Washington. Authorities are fully confident of reaching the expansion target of about 5% in 2025, Zhao Chenxin, vice chairman of the National Development and Reform Commission, said in a briefing.

US crude is headed for a monthly slump of more than 13%, the biggest since 2021, after touching a four-year low. Futures have been burdened by concerns that the US-led trade war will stifle economic activity and hurt energy demand. At the same time, the OPEC+ cartel has compounded bearish sentiment by ramping up idled production. The group will hold discussions on May 5 to weigh output plans for June.

The market’s next cues could come from a raft of major economic data this week, including US growth and payrolls figures. Investors will also get a chance to hear views on the global crude market outlook this week, with oil supermajors BP Plc, Shell Plc, Chevron Corp. and Exxon Mobil Corp. reporting earnings.

“Near-term crude looks decent despite bearish sentiment,” aided by low onshore crude inventories, said Aldo Spanjer, head of energy strategy at BNP Paribas. “Through the third quarter and the fourth quarter, we see enough stock build to take some of the bullish pressure off, while increasing non-OPEC+ supplies lengthen balances further.”

On the geopolitical front, the US and Iran reported signs of progress in talks on a deal over Tehran’s nuclear program, and the two sides agreed to meet again in Europe. Separately, an explosion at the nation’s Shahid Rajaee port on Saturday left dozens dead. The major hub has a strategic location on the Strait of Hormuz, a key conduit for the global oil trade.

Elsewhere, several Spanish oil refineries were halted after most of the country was hit by a power failure Monday. 

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