All eyes are on OPEC ahead of its May 5 meeting as it faces pressure from falling prices, weak demand, and internal rifts.
While some expect a pause in output hikes, the consensus points to continued increases. The group’s decision will be key in shaping oil market dynamics amid trade tensions and fragile global growth.
APRIL PRICE ACTION: TARIFFS, TRUMP, AND TURBULENCE
April witnessed WTI crude oil futures plummeting by 18.6%, marking its sharpest monthly decline since November 2021, as U.S. tariffs and OPEC+ supply hikes dragged prices.
President Trump’s April 2 announcement of 10% baseline tariffs on all imports, with elevated duties targeting China and others, triggered fears of a global trade slowdown. Additionally, China’s retaliatory tariffs on U.S. goods only intensified demand concerns.
OPEC+ exacerbated the selloff by boosting output by 138,000 bpd in April, its first production hike since 2022. The group had initially planned for gradual monthly increases of 135,000 bpd, but the higher-than-expected increase caught the market off guard, intensifying downward pressure on prices.
The cartel followed up with an announcement that it would hike output in May by 411,000 bpd. The accelerated pace of production increases is widely seen as politically motivated, reflecting pressure to align with U.S. interests amid growing geopolitical and economic tensions.
OUTPUT HIKES LOOM AMID POLITICAL TENSIONS AND INTERNAL RIFTS
OPEC+ faces growing pressure to raise output, despite weak demand. Political factors, internal pressure from key members, and a desire to protect market share are driving this shift.
Disagreements within the group are mounting. Kazakhstan, for example, says it can’t cut production and will prioritize domestic needs, continuing to exceed its target. In March, the UAE, Iraq, and Nigeria also pumped above quotas and are pushing for higher limits to support their budgets.
Source: OPEC and IEA
Saudi Arabia appears less willing to support prices with further cuts. Reuters reports the kingdom is prepared to tolerate lower prices to defend market share.
Rising domestic oil use from May to September, due to higher electricity demand, also supports more output.
OPEC+ is also under political pressure to boost output, with analysts suggesting Saudi Arabia and others may fast-track supply hikes at the May 5 meeting to ensure oil doesn’t become a flashpoint ahead of Trump’s upcoming visit to the Gulf.
OIL MARKET STRUGGLES WITH TWIN HEADWINDS: WEAK DEMAND AND RISING OPEC+ SUPPLY
OPEC has cut its 2025 oil demand growth forecast by 10.3% to 1.3 million bpd and trimmed its 2026 outlook by 10.5% to 1.28 million bpd, citing the impact of U.S. tariffs.
Source: OPEC, EIA, and IEA
The EIA and IEA echoed this downgrade, reinforcing expectations of prolonged price pressure amid trade tensions and rising supply.
Source: U.S. Bureau of Economic Analysis
Economic data from major consumers deepens the bearish tone. The U.S. economy contracted 0.3% in Q1 2025, its first decline since 2022, as firms rushed imports ahead of tariffs, disrupting trade flows. China’s April manufacturing PMI dropped to 49, marking its lowest since 2023 despite stimulus measures.
The trade tensions between the U.S. and China disrupt supply chains and increase costs, while slower economic growth in key regions curtails fuel consumption.
With global growth cooling and OPEC+ accelerating output, the oil market now faces a dual challenge: softening demand and swelling supply. The result is a volatile outlook skewed toward persistent oversupply.
HYPOTHETICAL TRADE SETUP
With OPEC+ likely to uphold or accelerate output hikes at the May 5 meeting due to the reasons stated above, WTI remains vulnerable.
Notably, WTI’s implied volatility remains near its YTD highs, and the skew stays deep in negative territory at 5.6, signalling stronger demand for downside protection over upside exposure.
Source: CME CVOL
The 21-day MA remains above the 9-day MA, indicating sustained bearish pressure, while the MACD continues to trend lower despite the May 1 price rebound.
RSI hovers in neutral territory but below the midpoint, signalling weakening bullish conviction.
All these indicators point to fading bullish momentum and sustained downside pressure.
Overall, bearish technicals, persistent oversupply risk, and soft economic data from the U.S., China, and Europe support a short-term bearish view.
Source: CME QuikStrike
With OPEC’s meeting set for 05 May, investors may explore the 05/May ML1K5 Monday weekly options.
This paper posits a Bearish Put Spread using weekly WTI options expiring on 05/May, offering defined risk and reward in a directional play with a 1.1x reward-to-risk ratio.
The long put at USD 61/barrel, and the short put at USD 57/barrel; this sets a breakeven at USD 59.09/barrel. The trade costs a net premium of USD 1.91/barrel (USD 1,910/contract)
The position yields a maximum profit of USD 2.09/barrel (USD 2,090/contract) if WTI settles below USD 57/barrel, and a maximum loss of USD 1.91/barrel (USD 1,910/contract) if it closes above USD 61/barrel.
The chart above was created using CME Group’s QuikStrike Strategy Simulator, which allows for precise modeling and clear visualization of trading strategies under different market conditions.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
While some expect a pause in output hikes, the consensus points to continued increases. The group’s decision will be key in shaping oil market dynamics amid trade tensions and fragile global growth.
APRIL PRICE ACTION: TARIFFS, TRUMP, AND TURBULENCE
April witnessed WTI crude oil futures plummeting by 18.6%, marking its sharpest monthly decline since November 2021, as U.S. tariffs and OPEC+ supply hikes dragged prices.
President Trump’s April 2 announcement of 10% baseline tariffs on all imports, with elevated duties targeting China and others, triggered fears of a global trade slowdown. Additionally, China’s retaliatory tariffs on U.S. goods only intensified demand concerns.
OPEC+ exacerbated the selloff by boosting output by 138,000 bpd in April, its first production hike since 2022. The group had initially planned for gradual monthly increases of 135,000 bpd, but the higher-than-expected increase caught the market off guard, intensifying downward pressure on prices.
The cartel followed up with an announcement that it would hike output in May by 411,000 bpd. The accelerated pace of production increases is widely seen as politically motivated, reflecting pressure to align with U.S. interests amid growing geopolitical and economic tensions.
OUTPUT HIKES LOOM AMID POLITICAL TENSIONS AND INTERNAL RIFTS
OPEC+ faces growing pressure to raise output, despite weak demand. Political factors, internal pressure from key members, and a desire to protect market share are driving this shift.
Disagreements within the group are mounting. Kazakhstan, for example, says it can’t cut production and will prioritize domestic needs, continuing to exceed its target. In March, the UAE, Iraq, and Nigeria also pumped above quotas and are pushing for higher limits to support their budgets.
Source: OPEC and IEA
Saudi Arabia appears less willing to support prices with further cuts. Reuters reports the kingdom is prepared to tolerate lower prices to defend market share.
Rising domestic oil use from May to September, due to higher electricity demand, also supports more output.
OPEC+ is also under political pressure to boost output, with analysts suggesting Saudi Arabia and others may fast-track supply hikes at the May 5 meeting to ensure oil doesn’t become a flashpoint ahead of Trump’s upcoming visit to the Gulf.
OIL MARKET STRUGGLES WITH TWIN HEADWINDS: WEAK DEMAND AND RISING OPEC+ SUPPLY
OPEC has cut its 2025 oil demand growth forecast by 10.3% to 1.3 million bpd and trimmed its 2026 outlook by 10.5% to 1.28 million bpd, citing the impact of U.S. tariffs.
Source: OPEC, EIA, and IEA
The EIA and IEA echoed this downgrade, reinforcing expectations of prolonged price pressure amid trade tensions and rising supply.
Source: U.S. Bureau of Economic Analysis
Economic data from major consumers deepens the bearish tone. The U.S. economy contracted 0.3% in Q1 2025, its first decline since 2022, as firms rushed imports ahead of tariffs, disrupting trade flows. China’s April manufacturing PMI dropped to 49, marking its lowest since 2023 despite stimulus measures.
The trade tensions between the U.S. and China disrupt supply chains and increase costs, while slower economic growth in key regions curtails fuel consumption.
With global growth cooling and OPEC+ accelerating output, the oil market now faces a dual challenge: softening demand and swelling supply. The result is a volatile outlook skewed toward persistent oversupply.
HYPOTHETICAL TRADE SETUP
With OPEC+ likely to uphold or accelerate output hikes at the May 5 meeting due to the reasons stated above, WTI remains vulnerable.
Notably, WTI’s implied volatility remains near its YTD highs, and the skew stays deep in negative territory at 5.6, signalling stronger demand for downside protection over upside exposure.
Source: CME CVOL
The 21-day MA remains above the 9-day MA, indicating sustained bearish pressure, while the MACD continues to trend lower despite the May 1 price rebound.
RSI hovers in neutral territory but below the midpoint, signalling weakening bullish conviction.
All these indicators point to fading bullish momentum and sustained downside pressure.
Overall, bearish technicals, persistent oversupply risk, and soft economic data from the U.S., China, and Europe support a short-term bearish view.
Source: CME QuikStrike
With OPEC’s meeting set for 05 May, investors may explore the 05/May ML1K5 Monday weekly options.
This paper posits a Bearish Put Spread using weekly WTI options expiring on 05/May, offering defined risk and reward in a directional play with a 1.1x reward-to-risk ratio.
The long put at USD 61/barrel, and the short put at USD 57/barrel; this sets a breakeven at USD 59.09/barrel. The trade costs a net premium of USD 1.91/barrel (USD 1,910/contract)
The position yields a maximum profit of USD 2.09/barrel (USD 2,090/contract) if WTI settles below USD 57/barrel, and a maximum loss of USD 1.91/barrel (USD 1,910/contract) if it closes above USD 61/barrel.
The chart above was created using CME Group’s QuikStrike Strategy Simulator, which allows for precise modeling and clear visualization of trading strategies under different market conditions.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Full Disclaimer - linktr.ee/mintfinance
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Full Disclaimer - linktr.ee/mintfinance
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.