Trading Update 4th May 2025

What Moved the Oil Market: 28th April to 4th May 2025

Oil markets saw a turbulent week, with Brent crude dropping sharply amid shifting supply expectations, geopolitical tensions, and weakening global demand. Spread bettors and traders had plenty to digest, from OPEC+ decisions to political noise from Washington and Beijing.

In this article, we’ll examine the past seven days, how Brent crude prices reacted, and what that meant for energy stocks and trading sentiment. Understanding these drivers is key to spotting opportunity and managing risk, whether you’re swing trading or scalping.

Brent Crude Weekly Price Movement

Brent crude opened the week on 28th April at around $65.86 per barrel. By the end of Friday, it had fallen close to $61. That’s a weekly drop of roughly 7%, making it the steepest decline since March.

The early part of the week saw oil prices come under pressure from weak manufacturing data and signals of softening demand in China. Traders grew wary of slowing growth in Asia, a key engine for global oil consumption.

By midweek, prices briefly stabilised after news broke that the US was considering tighter sanctions on Iran. That raised fears of supply disruptions, lifting Brent slightly. But the rebound didn’t last long.

On Thursday and Friday, bearish momentum returned as OPEC+ confirmed a further increase in June production. Concerns grew that rising supply could outpace global demand in the coming months.

Brent’s fall was matched by weakness in WTI (West Texas Intermediate), though the Brent-WTI spread remained relatively stable, offering some spread betting opportunities. Looking ahead, technical traders are closely watching the $60 level, as a break below could trigger further selling pressure.

Political Forces Behind the Price Drop

Several political developments influenced oil markets this week, with OPEC+ and US foreign policy taking centre stage.

The OPEC+ alliance announced plans to increase crude output by over 400,000 barrels per day starting in June. This move forms part of a broader strategy to unwind earlier production cuts. While higher supply usually meets rising demand in a growing economy, the market is grappling with the opposite.

Saudi Arabia pushed for stricter compliance among members like Iraq and Kazakhstan, but traders remain sceptical about enforcement. With demand signals looking weak, the production hike raised concerns about a supply glut.

Elsewhere, the US ramped up rhetoric against Iran. President Biden hinted at secondary sanctions targeting companies that continue purchasing Iranian crude. That injected short-lived volatility into the market, with some speculative buying midweek.

Meanwhile, tensions between the US and China resurfaced. Although there were whispers of fresh trade talks, no concrete progress emerged. Fears that renewed tariffs could dampen global growth weighed on energy demand forecasts.

As politics drives market sentiment, traders should remain nimble and reactive to headlines. Unexpected statements from key players can trigger fast, sharp moves in oil prices.

Stock Market Reactions and Energy Sector Impact

Energy stocks had a rough week. As oil prices fell, large-cap producers like ExxonMobil and Chevron saw their share prices take a hit. Both companies face pressure to maintain dividends and share buybacks, but with Brent trading well below $70, that’s becoming harder to justify.

The S&P 500 Energy Index declined sharply during the week, extending its monthly losses. In Texas, oil producers are reportedly reconsidering their drilling budgets, as many need Brent above $65 to remain profitable.

Broader equity markets offered some relief on Friday. Positive US employment data helped lift the S&P 500 and Nasdaq, boosting investor confidence. However, the energy sector continued to underperform, reflecting weak sentiment around oil.

From a spread betting perspective, this divergence presents opportunities. Traders shorting energy indices while going long on broader markets saw gains. But volatility remains high, and managing risk is more important than ever.

Spread Betting Strategies in a Volatile Oil Market

This week’s action offers valuable lessons for spread bettors. With prices falling fast, short-term strategies worked best, especially those focused on momentum or technical breakdowns.

One approach is trading the Brent-WTI spread. As OPEC+ ramps supply and US production stabilises, this spread could widen or narrow in response to regional fundamentals. Traders can position long or short depending on which benchmark is more vulnerable.

Another tactic is taking positions ahead of key OPEC+ meetings. The next full ministerial session is scheduled for late May, and traders will be watching for signs of a policy shift if prices stay weak.

Shorting oil futures during periods of low demand, especially when backed by bearish inventory data, has also worked well. However, geopolitical risk can create sudden spikes, so tight stop-loss orders are essential.

Economic data like US non-farm payrolls, inflation reports, and Chinese import figures can help inform timing. When combined with technical signals like moving averages or RSI divergences, traders can refine their entries and exits.

What to Watch in the Week Ahead

The oil market remains finely balanced. Traders should watch several key indicators in the week ahead.

• OPEC+ Commentary: Any talk of delaying or scaling back production hikes could support prices.

• US-Iran Developments: Fresh sanctions or enforcement moves could lead to renewed supply fears.

• Chinese Data Releases: Import, industrial, and retail numbers will offer insight into Asia’s energy demand outlook.

• US Inflation and Fed Speeches: These could affect the dollar and Treasury yields, influencing oil prices.

• Inventory Reports: Weekly updates from the US Energy Information Administration will give clues about supply levels.

If Brent falls below $60, we could see more selling as stop-losses are triggered. On the upside, any de-escalation in trade tensions or signs of demand recovery could help prices rebound.

Final Thoughts

The first week of May delivered high volatility and clear direction for oil markets. A sharp drop in Brent prices reflected growing concerns about oversupply and weakening global demand.

The opportunities were significant for spread bettors, but so were the risks. Staying informed is critical whether you trade oil directly or through related equities and indices.

Watch the political headlines, track economic data, and keep your strategies flexible. The oil market isn’t settling down anytime soon, and with each shift comes a chance to capitalise – if you’re prepared.

Keep an eye on the oil prices here.