Oil prices staged a recovery on Tuesday, buoyed by a weaker U.S. dollar, though gains remained limited due to persistent concerns over a potential U.S. recession and the impact of trade tariffs on global economic growth. Investors are closely watching OPEC+ as the alliance prepares to release additional supply in April, with uncertainty surrounding its next move.
Brent crude futures climbed to $69.75 a barrel, up 0.68%, while West Texas Intermediate crude gained 0.64% to reach $66.45 per barrel. This rebound followed a 1.5% decline in the previous session. A weaker dollar, which hit a four-month low, provided support by making oil more affordable for international buyers. However, lingering fears of economic contraction and inflation continue to weigh on investor sentiment.
Market analysts suggest that oil prices could stabilise if trade tensions ease, particularly if punitive tariffs are scaled back or a diplomatic resolution emerges between Russia and Ukraine. Tamas Varga of PVM noted that OPEC+ may reconsider its production strategy in response to the recent market dip, potentially delaying the planned supply increase set for April. Russian Deputy Prime Minister Alexander Novak indicated that while OPEC+ will proceed with its scheduled production hike, future cuts remain an option depending on market conditions.
Brent’s current position near $70 per barrel is seen as a key support level, and analysts at DBS Bank suggest that if prices fall below this threshold for an extended period, OPEC+ may halt production increases. The cartel is also expected to monitor U.S. foreign policy closely, particularly regarding Iran and Venezuela, which could influence future supply dynamics.
Meanwhile, U.S. trade policies continue to cast a shadow over global markets. President Donald Trump’s tariff strategies have impacted major oil-producing nations, including Canada and Mexico, while escalating tensions with China have led to retaliatory measures. Over the weekend, Trump signalled a possible economic transition period but refrained from forecasting a recession, despite sharp declines in U.S. stock markets. The S&P 500 suffered its steepest drop since December, while the Nasdaq experienced its biggest single-day percentage loss since September 2022.
Investors now await key U.S. inflation data set for release on Wednesday, which could influence the Federal Reserve’s interest rate decisions. Additionally, market participants are keeping a close eye on U.S. crude inventory reports, with preliminary estimates suggesting an increase in stockpiles while gasoline and distillate inventories may have declined. Reports from the American Petroleum Institute and the Energy Information Administration are expected to provide further insights into supply and demand trends.
Challenger Energy Group Plc (LON:CGE) is an Atlantic-margin focused energy company, with production, development, appraisal, and exploration assets in the region. Challenger Energy’s primary assets are located in Uruguay, where the Company holds two high impact offshore exploration licences, totalling 19,000km2 (gross) and is partnered with Chevron on the AREA-OFF 1 block. Challenger Energy is quoted on the AIM market of the London Stock Exchange.
