Oil Prices Plunge 2.5% Amid Trump's Fed Criticism, Rebound on Tuesday

International oil prices experienced a notable decline on Monday, followed by a modest recovery on Tuesday. The initial drop was triggered by escalating criticism from U.S. President Donald Trump directed at Federal Reserve Chairman Jerome Powell. This criticism sent shockwaves through global markets, leading to a sharp decline in oil prices. Brent crude fell by 2.5%, bringing the price close to $67 per barrel. However, the situation improved on Tuesday as U.S. stock index futures rebounded, providing some support to oil prices.

The rebound in oil prices on Tuesday was influenced by ongoing concerns over global economic uncertainty, particularly due to U.S. trade tariffs. Despite the slight recovery, market sentiment remained cautious. The potential for increased oil supply from OPEC and the broader economic slowdown continued to weigh on prices. Analysts noted that the market was struggling to price in the sustained recovery of demand, further dampening bullish sentiment.

Martin Ratz, a global oil strategist, commented that the largest wave of selling may have passed in the short term. He noted that as the summer season approaches, seasonal demand could provide some support. However, he cautioned that downward pressure could return in the latter half of the year. Despite recent pessimism due to lowered demand forecasts, market indicators showed strong performance. The nearest-month Brent crude futures contract showed a premium over the next-month contract, indicating supply tightness.

The technical indicators also played a role in the price movements. Brent crude futures settled at $66.26 per barrel, down 2.5%, while U.S. crude futures fell by $1.60. The market was closely watching key technical levels, with Brent crude struggling to maintain its position above $67 per barrel. The overall trend remained bearish, with prices hovering below the 50-day and 200-day moving averages.

The potential for increased oil supply from Iran, following progress in nuclear talks, added to the downward pressure on prices. The market was pricing in the possibility of more Iranian oil entering the market, which could further increase supply. Additionally, the OPEC+ group's plans to increase production by 41.1 million barrels per day starting in May added to the bearish sentiment. Despite some members' inconsistent compliance with production cuts, the net increase in supply was seen as a negative factor for oil prices.

The market's focus on the upcoming U.S. Purchasing Managers' Index (PMI) data and the potential for further economic slowdown added to the uncertainty. If the PMI data indicates a slowing economy, it could exacerbate the downward pressure on oil prices. The market was also watching for any signs of a potential rebound in demand, which could provide some support to prices.

Overall, the oil market remained volatile, with prices fluctuating in response to geopolitical developments, economic data, and technical indicators. The rebound on Tuesday provided some relief, but the underlying concerns over supply and demand dynamics continued to weigh on prices. Investors were advised to remain cautious and closely monitor market developments for any potential shifts in sentiment.