Weak US economic report weighs on oil prices

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

IMAGE: Volatility in the US economy. Getty Images

The US gross domestic product (GDP), a key indicator of demand growth and consumer spending activity, decreased at an annualised rate of 0.3% in the January-March period, after increasing at a 2.4% rate in the fourth quarter of 2024, the US Commerce Department’s Bureau of Economic Analysis (BEA) said.

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.

This primarily reflects a slump in demand growth for commodities, including crude oil, amid the ongoing tariff dispute between the world's two largest oil consumers – the US and China, market analysts said.

“[Oil] demand isn’t sending good signals either. U.S. Q1 saw its first GDP contraction since 2022—tariff-front-run imports blew out net exports,” SPI Asset Management managing partner Stephen Innes remarked.

By Aparupa Mazumder

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