Oil prices extended declines on Wednesday and were set for their largest monthly drop in almost three and a half years as the global trade war eroded the outlook for fuel demand, while concerns over mounting supply also weighed.

Brent crude futures fell $1.13, or 1.8%, to $63.12 per barrel by 0813 GMT. U.S. West Texas Intermediate crude futures dropped $1.11, or 1.8%, to $59.31 a barrel.

So far this month, Brent and WTI have lost 15.4% and 17%, respectively, the biggest percentage drops since November 2021.

Both benchmarks slumped after U.S. President Donald Trump's April 2 announcement of tariffs on all U.S. imports. They then sank further to four-year lows as China responded with levies, stoking a trade war between the top two oil-consuming nations.

Trump's tariffs have made it probable the global economy will slip into recession this year, according to a Reuters poll.

China's factory activity contracted at the fastest pace in 16 months in April, a factory survey showed on Wednesday.

U.S. consumer confidence slumped to a nearly five-year low in April on growing concerns over tariffs, data showed on Tuesday.

While orders Trump signed on Tuesday to soften the blow of auto tariffs eased some jitters among investors, oil prices were also undermined by concerns over mounting supply from OPEC+.

Several OPEC+ members will suggest a ramp-up of output hikes for a second straight month in June, sources told Reuters last week. The group will meet on May 5 to discuss output plans.

"The very real possibility that OPEC+ will continue to bring extra barrels to the market as it fights to keep order within its ranks is added to the diplomatic thrusts in Ukraine and Iran which if successful means more international crude on the water at a time when a trade war will squash any hope of demand growth," said PVM analysts.

Also sending bearish signals on the supply side, U.S. crude oil inventories rose by 3.8 million barrels last week, market sources said on Tuesday citing American Petroleum Institute data.

U.S. government data is due at 10:30 a.m. ET (1430 GMT). Analysts polled by Reuters expect, on average, a 400,000 barrel increase in U.S. crude oil stocks.

Source: Reuters