Crude Oil: Beware of the Downside Risks of WTI
2025-04-22
■ Global crude oil supply and demand are expected to see a greater supply surplus in 2025
■ Global crude oil supply and demand are expected to remain in a pattern that is prone to easing, and we should be wary of the downside risks of WTI
International organizations have released their global crude oil supply and demand forecasts as of April.
Regarding the growth of global daily crude oil demand in 2025, the U.S. Energy Information Administration (EIA) believes that as the U.S. tariff policy progresses, uncertainty will increase, which will become a constraint on crude oil demand. It maintains this view and significantly lowers demand growth from 1.27 million barrels last month to 900,000 barrels (2024: 102.74 million barrels → 2025: 103.64 million barrels). The International Energy Agency (IEA) also lowered the growth rate from 1 million barrels last month to 700,000 barrels (2024: 102.8 million barrels → 2025: 103.5 million barrels). In particular, it remains highly vigilant that the intensification of Sino-US trade frictions may lead to a slowdown in oil demand in both countries, while emphasizing that the outlook is uncertain due to the prolonged tariff negotiations. The Organization of Petroleum Exporting Countries (OPEC) lowered its forecast for demand growth from 1.45 million barrels to 1.3 million barrels (2024: 103.75 million barrels → 2025: 105.05 million barrels), but the downward adjustment was relatively small.
Regarding the growth of global crude oil supply in 2025, the EIA lowered its forecast from 1.39 million barrels to 1.35 million barrels (2024: 102.78 million barrels → 2025: 104.17 million barrels), and the IEA (excluding OPEC) also lowered its forecast from 1.5 million barrels to 1.3 million barrels (2024: 70.2 million barrels → 2025: 71.5 million barrels). Despite the downward adjustment due to the cautious attitude towards demand, the overall production increase trend is still maintained, and the EIA expects that the global crude oil market will be oversupplied in 2025.
Although the US's policy of imposing tariffs on each other has been temporarily suspended, and the impact on investor sentiment has eased, there are still uncertainties surrounding tariff negotiations with various countries, and it is difficult to expect an improvement in the demand outlook. On the supply side, the production trend of OPEC+*¹ cannot be ignored. OPEC+ has gradually reduced its voluntary production cuts of 2.2 million barrels per day as planned since April. In addition, eight voluntary participating countries, such as Saudi Arabia, announced that they will increase production by 411,000 barrels per day starting in May. This increase is about three times the initial plan. Behind the market's unexpected decision to increase production, in addition to the consideration of shifting from maintaining prices to restoring market share, it is also seen as a response to the US government's request to lower oil prices. Against this background, crude oil futures prices (WTI) fell below the support line of $65 since 2021, and fell to the $55 range on April 9, setting a new low since February 2021. It is expected that the global supply and demand of crude oil will continue to follow a pattern that is easy to loosen, and we should continue to be vigilant about the downside risks of WTI.
■ Global crude oil supply and demand are expected to remain in a pattern that is prone to easing, and we should be wary of the downside risks of WTI
International organizations have released their global crude oil supply and demand forecasts as of April.
Regarding the growth of global daily crude oil demand in 2025, the U.S. Energy Information Administration (EIA) believes that as the U.S. tariff policy progresses, uncertainty will increase, which will become a constraint on crude oil demand. It maintains this view and significantly lowers demand growth from 1.27 million barrels last month to 900,000 barrels (2024: 102.74 million barrels → 2025: 103.64 million barrels). The International Energy Agency (IEA) also lowered the growth rate from 1 million barrels last month to 700,000 barrels (2024: 102.8 million barrels → 2025: 103.5 million barrels). In particular, it remains highly vigilant that the intensification of Sino-US trade frictions may lead to a slowdown in oil demand in both countries, while emphasizing that the outlook is uncertain due to the prolonged tariff negotiations. The Organization of Petroleum Exporting Countries (OPEC) lowered its forecast for demand growth from 1.45 million barrels to 1.3 million barrels (2024: 103.75 million barrels → 2025: 105.05 million barrels), but the downward adjustment was relatively small.
Regarding the growth of global crude oil supply in 2025, the EIA lowered its forecast from 1.39 million barrels to 1.35 million barrels (2024: 102.78 million barrels → 2025: 104.17 million barrels), and the IEA (excluding OPEC) also lowered its forecast from 1.5 million barrels to 1.3 million barrels (2024: 70.2 million barrels → 2025: 71.5 million barrels). Despite the downward adjustment due to the cautious attitude towards demand, the overall production increase trend is still maintained, and the EIA expects that the global crude oil market will be oversupplied in 2025.
Although the US's policy of imposing tariffs on each other has been temporarily suspended, and the impact on investor sentiment has eased, there are still uncertainties surrounding tariff negotiations with various countries, and it is difficult to expect an improvement in the demand outlook. On the supply side, the production trend of OPEC+*¹ cannot be ignored. OPEC+ has gradually reduced its voluntary production cuts of 2.2 million barrels per day as planned since April. In addition, eight voluntary participating countries, such as Saudi Arabia, announced that they will increase production by 411,000 barrels per day starting in May. This increase is about three times the initial plan. Behind the market's unexpected decision to increase production, in addition to the consideration of shifting from maintaining prices to restoring market share, it is also seen as a response to the US government's request to lower oil prices. Against this background, crude oil futures prices (WTI) fell below the support line of $65 since 2021, and fell to the $55 range on April 9, setting a new low since February 2021. It is expected that the global supply and demand of crude oil will continue to follow a pattern that is easy to loosen, and we should continue to be vigilant about the downside risks of WTI.