By Giulia Petroni

Here is a look at what happened in oil markets in the week of April 28-May 2 and what the focus will be in the days to come.

OVERVIEW: Oil prices have come under significant pressure in recent days and are set for a sharp weekly drop due to uncertainties surrounding the status of trade negotiations between the U.S. and China and OPEC+'s looming announcement on June output hikes. Brent crude trades at around $61 a barrel, while West Texas Intermediate is at around $58 a barrel.

MACRO: The latest U.S. data showed jobs grew more than expected in April, but the pace of gains slowed slightly. Consumer sentiment in April hit one of its lowest levels on record, with more Americans now expecting weaker income growth in the year ahead.

Also, the Dallas Fed's gauge of Texas manufacturing activity weakened significantly last month, while in China export orders plunged and manufacturing activity was the weakest in more than a year.

GEOPOLITICAL RISKS: Investor sentiment improved slightly on Friday after Beijing said it was weighing starting trade negotiations with Washington, but concerns that a prolonged trade war could dent global economic growth and energy demand persist.

Traders are also closely watching any progress in the negotiations to end the war in Ukraine, as well as nuclear talks between the U.S. and Iran. The two are soon set to hold their fourth round of talks, but President Trump said any country or entity buying Iranian oil would be immediately subject to secondary sanctions.

SUPPLY AND DEMAND: Major Wall Street banks significantly cut their oil price forecasts for the remainder of the year amid a clouding demand outlook.

"Hopes for a swift resolution to the U.S.-China trade dispute have so far been dashed. This has reignited concerns about demand in the two largest oil-consuming countries," analysts at Commerzbank Research said. "On the other hand, OPEC+ is threatening to increase production further."

Most market participants expect the group to accelerate supply increases for a second consecutive month likely due to internal disagreements with over-producing countries. "Apparently, some countries are no longer willing to tolerate the lack of production discipline on the part of individual members," the analysts said.

WHAT'S AHEAD: Key members of the OPEC+ alliance are soon set to convene virtually to discuss June output in a meeting that could determine the trajectory of crude in the coming weeks. According to media reports, the conference will now take place Saturday instead of Monday.

Meanwhile, top oil exporter Saudi Arabia is expected to release its official selling prices for June deliveries early next week.

Traders will also focus on the U.S. Energy Information Administration's monthly short-term energy outlook due on Tuesday for more insights into supply and demand expectations. Reports from OPEC and the International Energy Agency are instead due the following week.

At a macro level, investors will be closely watching the Federal Reserve's FOMC meeting and Chair Jerome Powell's press conference on Wednesday. Short-term interest rates will likely remain unchanged as policymakers wait for clearer signs on the state of inflation.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

May 02, 2025 12:26 ET (16:26 GMT)

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