Crude oil's decline shows no signs of ending, with prices sinking more than 2% below $57 per barrel on Thursday morning as markets brace for a potential OPEC+ supply hike and rising signs of economic stress across major economies.

West Texas Intermediate crude futures – as closely represented by the United States Oil Fund (NYSE:USO) – are now on track to log four straight days of declines and reach April lows, when front-month contracts broke below $55, marking the cheapest level in over four years.

Since peaking in March 2022, oil prices have plunged 55%, with a 21% drop year-to-date and a 30% decline over the past 12 months, indicating a persistent bear market struggling to find a floor.

OPEC+ May Raise Supply Despite Falling Prices

Fresh pressure on prices came from reports that Saudi Arabia has told allies and industry participants it is prepared to endure a longer stretch of low prices without further supply cuts.

This strengthened speculation that OPEC+ could unveil a new production increase at its May 5 meeting.

David Goldman, head of trading at Novion Global, said reports about Riyadh’s stance triggered Thursday's sharp sell-off.

"Oil prices fell as much as 4% after reports that Saudi Arabia can endure a sustained period of depressed prices," he said, noting that the market fears a longer period of surplus supply from the Saudi-led alliance.

Goldman Sachs analyst Daan Struyven expects OPEC+ to raise production modestly by 100,000 barrels per day in June and July, keeping output steady afterward. Yet, the risks are tilted toward a more aggressive ramp-up. "Kazakhstan’s focus on national interests increases risks of a larger OPEC+ production hike in June," Struyven said.

“While the 90-day pause on reciprocal tariffs provided a stay of execution, the chances of recession remains unusually high,” he added.

Adding to bearish sentiment was the latest GDP report, which showed the U.S. economy contracted in the first quarter for the first time in three years.

Goldman Sachs' economics team now sees a 45% probability of a U.S. recession in the next 12 months, citing persistently high policy uncertainty, weak real income growth and cautious consumer spending.

They believe oil prices could fall even more during a recession than during a typical growth slowdown.

“Oil prices are likely to decline more in the next recession relative to the slowdown in global growth and in oil demand because OPEC supply is likely to fall less than the median-peak-to-trough decline of 2.7mb/d in for the last three recessions,” Struyven said.

‘The Cure For Low Oil Prices Is Low Oil Prices’

David Morrison, senior market analyst at Trade Nation, said the bearish backdrop is reinforced by structural demand weakness in China and new geopolitical risks.

"The global demand growth outlook was weak even before President Trump began his trade war," he said. "Now it has to deal with Trump's tariffs which have effectively ended trade between the U.S. and China."

“OPEC+ is in no mood to step in to support the oil price. Quite the contrary, as the group is anxious to unwind the production cuts which did so much to support the oil price over the past couple of year,” he added.

Still, he indicated that markets rarely move in straight lines. Sharp bottoms, like sharp tops, often signal a turning point, though it’s too early to say whether crude has reached that stage.

Amid mixed signals and rising uncertainty, Morrison suggested that oil remains tough to trade, but reiterated a familiar market truism: "The cure for low oil prices is low oil prices."

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Image created using artificial intelligence via Midjourney.