Oil Posts Worst Monthly Showing Since 2021 As Saudis Stir Bearish Sentiment

Meanwhile, the U.S. posts troubling economic data: File Image/Pixabay

Oil on Wednesday posted the steepest monthly decline in four years and also suffered daily losses as Saudi Arabia signalled that it could live with lower oil prices in exchange for upping output and gaining more market share.

Brent settled down $1.13, or 1.7 percent lower, at $63.12 per barrel, while West Texas Intermediate settled down $2.21, or 3.6 percent, at $58.21.

WTI prices have lost roughly 16 percent this month, while Brent has dropped 17 percent, the worst monthly drops since November 2021.

In addition to Saudi officials reportedly telling colleagues the kingdom is unwilling to prop up the crude market with further supply cuts and can handle a prolonged period of low prices, oil trading on Wednesday was also influenced by data showing that the U.S. economy contracted in the first quarter for the first time in three years.

Additionally, labour market data showed slower hiring in the U.S. than expected, which analysts took to mean that the tariffs imposed by U.S. president Donald Trump may be negatively affecting economic growth.

With regards to the Saudi report, Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, said, "This confirms the market's fears that Saudi Arabia's accelerated unwinds were not temporary, but a long-term strategy shift," and it raised the question of whether "Saudi is going to repeat the 2020 playbook to dramatically increase production."

More bearish news on Wednesday came from China, which reported the worst contraction in factory activity since December 2023, also attributed by some to the trade war started by Trump.

For his part, Trump told ABC News that China deserved the steep tariffs on their exports and added he didn't want the country's products unless it  entered into a mutually agreeable new trade deal with the U.S.