Slippery oil picture
- Crude oil prices down more than 16% in April
- Biggest six-day loss in more than three years
- Morgan Stanley & Co. lowered oil price target
As wild a ride as the stock market has been on over the past week, the oil market’s swings have been even more impressive.
The following chart comparing May WTI crude oil futures (CLK5) to the S&P 500 (SPX) shows oil prices have taken the bigger hit so far this month. As of Thursday, oil prices were down nearly 16% in April, compared to a roughly 6% decline for the SPX:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation. Note: It is not possible to invest directly in an index.)
On Tuesday, CLK5 closed at $59.58, marking the lowest crude prices since 2021 and capping a six-day, 18% sell-off. At that point, US oil prices were down roughly 25% from their mid-January high around $80. The oil rout has also made itself felt in stocks, with the S&P 500 energy sector down nearly 10% over the past week.
Like the stock market, oil made a dramatic pivot on Wednesday, with CLK5 erasing a 5.3% intraday loss to close up 7.7%. Both markets also reverted to the downside on Thursday, with CLK5 retreating 3.7%, and the SPX falling 3.5%.
Of course, the recent downturns in both markets unfolded after President Trump unveiled wide-ranging tariffs last week, even though oil wasn’t specifically part of the levy package. Nonetheless, both markets were driven by the same concern—that prolonged tariffs could tip the economy into recession. And despite the massive rallies in both markets on Wednesday, Thursday’s pullbacks implied the tariff pause may not have erased concerns about the economy’s trajectory.
While lower oil prices can have a welcome anti-inflationary effect, they also often function as a barometer for the economic outlook, since expectations for growth translate into higher demand for energy, while expectations for a slowdown imply reduced energy demand.
Finally, tariffs aren’t the only factor contributing to the slide in oil prices. In lowering their price outlook for oil this year, Morgan Stanley & Co. strategists noted that OPEC’s recent decision to boost production added to an “already soft supply-demand backdrop.”1
For now, oil may be in the same boat as the stock market, in that it could face continued volatility until more clarity in the tariff picture translates to increased confidence in the economic outlook.
Market Mover Update: On Thursday the US stock market came close to its first trading halt since March 2020 when the SPX fell as much as 6.3% intraday. Trading is halted for 15 minutes when the SPX falls 7% below the previous day’s close. Click here for a detailed description of the market’s “circuit breaker” system.
The size of the decline aside, Thursday’s stock market performance was in line with the SPX’s tendency to pull back after exceptionally large up days like Wednesday (see “Record day for stocks”). Morgan Stanley & Co. strategists noted yesterday that while the tariff pause may have reduced immediate downside risk, it also prolongs uncertainty.2
Today’s numbers include (all times ET): PPI (8:30 a.m.), consumer sentiment (10 a.m.).
Today’s earnings include: Blackrock (BLK), Fastenal (FAST), JPMorgan Chase (JPM), Morgan Stanley (MS), Wells Fargo (WFC).
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1 Morgan Stanley.com. Tariffs & Oil—Sensitizing Lower Oil. 4/3/25.
2 Morgan Stanley.com. Still Living on the Edge. 4/10/25.