Weak US economic report weighs on oil

Brent crude oil price came under pressure after the US Department of Commerce released its revised GDP estimate for the first quarter of this year.

IMAGE: Getty Images

The US' gross domestic product (GDP), a key indicator of demand growth and consumer spending activity, decreased at an annualised rate of 0.2% in the January–March period, according to the second estimate released by the US Commerce Department’s Bureau of Economic Analysis (BEA).

This follows a 2.4% growth rate in the fourth quarter of 2024. Oil prices reacted negatively to the news as the quarterly US GDP contracted for the first time since 2022.

“The decrease in real GDP in the first quarter primarily reflected an increase in imports… and a decrease in government spending,” the BEA said.

The data has sparked concerns about an economic contraction in the US at the start of the year, which could weigh on demand growth for commodities like crude oil.

Market analysts have pointed to the ongoing tariff dispute between the US and its trade partners as a contributing factor to the slowdown.

Oil market’s sentiment “wasn’t helped by a selloff across broader markets after data showed the US economy shrank at the start of the year,” ANZ Bank’s senior commodity strategist Daniel Hynes wrote.

By Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online