Oil headed for its largest monthly decline since November 2021 as investors let go of hopes for early breakthroughs in US-led trade negotiations at a time when the OPEC+ alliance has been loosening supply curbs.

West Texas Intermediate futures — which were again in the upper $50s on Wednesday — have shed more than 16% this month. Global benchmark Brent traded near $63 a barrel.

As a vital industrial commodity, oil is often subject to huge monthly swings, from turning negative during the pandemic in 2020 to touching almost $140 a barrel when Russia invaded Ukraine. So far this year, US crude has averaged close to $69 a barrel, the lowest since 2021.

The US economy contracted for the first time since 2022 in the first quarter as a result of a massive surge in pre-tariff imports and softer consumer spending. In China, factory activity slipped into the worst contraction since December 2023, revealing early damage from the trade war.

Crude has been battered this month, touching a four-year low, as US President Donald Trump’s sweeping trade levies — especially on top importer China — have blunted the outlook for energy consumption.

“Crude futures is extending yesterday’s sell-off as no real traction on tariff negotiation has been realized,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities. “While current demand is still questionable, the longer the delays on tariff deals, the more nervous the crude market becomes, especially if OPEC raises production.”

On the supply side, OPEC+ has been easing output curbs, with JPMorgan Chase & Co. warning the cartel may accelerate planned production increases at a meeting next week.

Elsewhere, government data released Wednesday showed US crude inventories dropped by 2.7 million barrels a day, the biggest drawdown in more than a month. Gasoline reserves also fell to the lowest since December, easing some concerns of declining fuel consumption.