Oil is entering its historically strongest month with a bang, as a 3% rally on the final day of March sent West Texas Intermediate crude to a six-week high, just as geopolitical risks reemerge and seasonal trends signal further upside.
Why Oil Is Suddenly Heating Up?
WTI crude, which is tracked by the United States Oil Fund
Several bullish forces are converging. First, the ongoing delay in reaching a Black Sea ceasefire between Ukraine and Russia keeps supply risks on the table. Moscow has demanded sanctions relief as a condition for compliance, which could stall negotiations further.
Trump's latest comments in which he threatened secondary sanctions of up to 50% on buyers of Russian oil added more fire to an already tense backdrop.
"If Russia and I are unable to make a deal on stopping the bloodshed in Ukraine, and if I think it was Russia's fault - which it might not be - but if I think it was Russia's fault, I am going to put secondary tariffs on oil, on all oil coming out of Russia," Trump told NBC.
The president also threatened military strikes on Iran if a new nuclear deal isn't reached. "If they don't make a deal, there will be bombing - the likes of which they have never seen before." Trump also floated the idea of a 25% indirect tariff on Tehran's oil exports, deepening fears of a renewed Middle East energy shock.
Is Seasonality Setting Up A Spring Oil Rally?
Beyond geopolitics, historical performance is also on the side of oil.
April has statistically been the best month for WTI crude over the past four decades, delivering average gains of 3.4% and rising 63% of the time. The standout years were 1986, 2015, and 1994, with returns of 28%, 25.3%, and 14.3%, respectively. By contrast, April 2002 and 2005 were outliers, dropping 16.4% and 10.3%.
May isn't far behind. The second-best month on average, crude oil gained 2.3% historically, though only 48% of the time. However, the average is skewed by post-crisis rebounds, like the 88% rally in May 2020 during the COVID recovery and a 29.7% jump in May 2009 following the global financial crisis.
Bank of America technical analyst Paul Ciana said the second quarter has typically been strong for oil, with an average gain of about 10% since 1984. The current pattern could favor buying dips in April for a potential upside through June.
"The last ten years favor buying an April dip for a May - June rally," Ciana said.
In the first three weeks of April, oil posted gains 66% of the time. He also noted that oil has historically traded higher by the end of August in 73% of election cycle years, like 2025.
This looming geopolitical squeeze, combined with seasonal strength, is why many traders are eyeing a test of the $80 level ahead of the summer driving season. With refinery maintenance winding down and gasoline demand typically ramping up in the second quarter, the fundamentals could align for a bullish breakout.
