DTN Oil Update
Oil Futures Slid $1 on Ample Supply Expectations
HOUSTON (DTN) -- Oil futures dropped by $1 on average Monday due to persistent uncertainty caused by trade tariffs and their potential impact on global economic growth, as well as expectations of abundant supply and weak demand fundamentals worldwide.
Expectations of ample global supplies, driven by additional output from OPEC+ countries in May and progress in negotiations over the Iranian nuclear program, fueled the bearish sentiment in the oil futures market throughout the day.
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The front-month NYMEX WTI futures contract dropped by $1.12 to $61.90 barrel (bbl) while the ICE Brent futures contract for June delivery fell by $1.17 to $65.70, respectively.
Downstream, May RBOB gasoline futures contract was down by $0.0181 to $2.1008 gallon, while the front-month ULSD futures contract rose by $0.0071 to $2.1744 gallon.
The U.S. Dollar Index dropped by 0.559 points to 98.695, the lowest level recorded so far in 2025, compared to an average price of 104.96.
The combination of abundant global supplies and weak demand, particularly from China due to the ongoing trade war with the United States, has kept the two main benchmark crude at their lowest levels of the year.
On Sunday, U.S. Treasury Secretary Bessent denied direct tariff negotiations with his Chinese counterpart. The Trump administration has levied a total 145% tariff on imported goods from China, while the Chinese government has imposed reciprocated import taxes totaling 125% on U.S. imports so far this year.
In contrast, Iran and U.S. officials are scheduled to hold further meetings to discuss Iran's nuclear program, which has failed to comply with standards set in 2015. The possibility of a mutual agreement could lead to the lifting of U.S. sanctions imposed on Iranian crude trade, potentially adding Iranian crude oil output to international markets.
This week's macroeconomic data releases should provide more insight into global economic developments. U.S. and E.U. GDP data, spending and employment reports are scheduled for release, along with several manufacturing PMIs.
