Explore Topics and Trends impacting today's markets

The oil market has been volatile. At the beginning of April 2023, WTI Crude Oil surged by $5 in one day to over $80 per barrel as OPEC + announced production cuts. After that, oil fell back, and by early May had dropped below $70 per barrel.


Several factors explain why the announced production cuts from OPEC+ have not worked to sustain a higher price for oil.

First, Russia is still pumping oil as fast as it can because it needs the money to sustain its invasion of Ukraine. The Russians sell much of their oil to India and China at very steep discounts to prevailing world prices. The availability of inexpensive Russian oil has helped China to resume its upward economic growth path in 2023 as it recovers from its zero-COVID policy of 2022 without pushing up the price of oil. China also has large buffer stocks of many commodities, so faster growth in China tends to lead to increases in demand for oil by as much as a year out.


Then, there is the possibility of a U.S. recession, which has only been enhanced by the debt ceiling debate, combined with the lagged effects of the recent banking turmoil and the Federal Reserve’s push to get short-term interest rates to 5% from near zero at the beginning of 2022.


So far, at least, weak global demand has overwhelmed attempts by OPEC+ to push prices higher. Some new demand may arrive soon if the United States accelerates refilling its Strategic Petroleum Reserve, but for now, considerable uncertainty over the future oil price prevails given the economic concerns.



OpenMarkets is an online magazine and blog focused on global markets and economic trends. It combines feature articles, news briefs and videos with contributions from leaders in business, finance and economics in an interactive forum designed to foster conversation around the issues and ideas shaping our industry.

All examples are hypothetical interpretations of situations and are used for explanation purposes only. The views expressed in OpenMarkets articles reflect solely those of their respective authors and not necessarily those of CME Group or its affiliated institutions. OpenMarkets and the information herein should not be considered investment advice or the results of actual market experience. Neither futures trading nor swaps trading are suitable for all investors, and each involves the risk of loss. Swaps trading should only be undertaken by investors who are Eligible Contract Participants (ECPs) within the meaning of Section 1a(18) of the Commodity Exchange Act. Futures and swaps each are leveraged investments and, because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money deposited for either a futures or swaps position. Therefore, traders should only use funds that they can afford to lose without affecting their lifestyles and only a portion of those funds should be devoted to any one trade because traders cannot expect to profit on every trade. BrokerTec Americas LLC (“BAL”) is a registered broker-dealer with the U.S. Securities and Exchange Commission, is a member of the Financial Industry Regulatory Authority, Inc. (www.FINRA.org), and is a member of the Securities Investor Protection Corporation (www.SIPC.org). BAL does not provide services to private or retail customers.. In the United Kingdom, BrokerTec Europe Limited is authorised and regulated by the Financial Conduct Authority. CME Amsterdam B.V. is regulated in the Netherlands by the Dutch Authority for the Financial Markets (AFM) (www.AFM.nl). CME Investment Firm B.V. is also incorporated in the Netherlands and regulated by the Dutch Authority for the Financial Markets (AFM), as well as the Central Bank of the Netherlands (DNB).

©2024 CME Group Inc. All rights reserved