DTN Oil

WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange settled the final trading session of April higher, although all petroleum contracts suffered their sixth consecutive monthly loss as investors look to a sharply slowing economy in the United States and Eurozone, while China's reopening had failed to boost global oil demand, with refiners in Asia seen cutting run rates amid poor margins.

Diesel and gasoline markets in Asia have weakened significantly over the past month despite the reopening of China -- the region's largest economy, according to trade sources. In Singapore, profits from producing middle distillates more than halved in recent weeks to the lowest level this year -- another bearish sign for the outlook on the market. Bloomberg News reported that some refiners in the region have already cut run rates as margins sink and China's exports of refined products surged amid weak domestic demand.

China's industrial sector had not fully recovered from the COVID-induced slump before trade tensions with the United States flared again, leading some analysts to forecast that the long-awaited rebound might never come.

"Even though industrial production rebounded somewhat, market demand hadn't recovered completely," National Bureau of Statistics statistician Sun Xiao said in a statement accompanying the data.

Domestically, investors are fixated on a sharply slowing U.S. economy that eased to just a 1.1% annualized growth rate in the first quarter and likely dipped below 1% at the start of the second quarter. Goldman Sachs forecast GDP growth would average 0.6% for the second and third quarters before rebounding to 0.9% in the final three months of the year. This outlook doesn't bode well for fuel consumption either from businesses or consumers.

The Federal Reserve's preferred inflation metric, Personal Consumption and Expenditures, picked up the pace to 4.9% in the January-through-March period, the quickest increase in a year.

High inflation is underscored by a still-tight labor market that continued to show signs of strength in April despite a slowdown in the broader economy. Weekly unemployment claims fell for the first time in three weeks as of April 22, delivering an unwelcome surprise to the Federal Reserve that has tried to slow the red-hot labor market for more than a year now.

Against this backdrop, OPEC+ production cuts of 1.6 million bpd announced on April 2 did little to backstop the slide in oil prices. West Texas Intermediate and Brent crudes have now erased all gains fueled by the OPEC+ cuts as traders fret over the health of the global economy and potential recession in the United States. On Thursday, Russia's Deputy Prime Minister Alexander Novak said that "OPEC+ considers global oil market balanced that requires no further production cuts."

Novak also confirmed that Russia reached its targeted output cuts for the month of April of 500,000 bpd, or 5% of total output. Those cuts will remain in force until the end of this year.

At settlement, NYMEX June WTI futures advanced to $76.78 bbl, up $2.02 on the session, while international crude benchmark ICE Brent futures for June delivery gained $1.17 bbl to expire at $79.54 bbl. Next-month delivery July Brent contract settled the session at $80.33 bbl. NYMEX May RBOB futures expired at $2.5780 gallon, up $0.0452, and next-month delivery June contract settled the session at $2.5301 gallon. May ULSD futures expired $0.0245 higher at $2.3787 gallon, and the next-month delivery June contract narrowed discount to just $0.0016 to settle at $2.3771 gallon.