Oil prices surged by more than $1 per barrel on Monday after OPEC+ announced a July production increase matching the modest hikes of the previous two months.
Oil prices surged more than $1 per barrel on Monday after OPEC+ announced a July production increase matching the modest hikes of the previous two months.
This decision relieved concerns from those anticipating a larger supply boost.
Brent crude futures rose $1.46, or 2.33%, to $64.24 per barrel by 0626 GMT, recovering from a 0.9% drop on Friday. Meanwhile, U.S. West Texas Intermediate crude climbed $1.66, or 2.73%, to $62.45 per barrel, bouncing back from a 0.3% decline in the previous session.
On Saturday, OPEC and its allies—collectively known as OPEC+—agreed to increase output by 411,000 barrels per day in July.
This marks the third consecutive month with the same rise, as the group aims to regain market share and discipline producers exceeding their quotas.
Many had anticipated that OPEC+ would consider a larger production boost.
“Had they gone through with a surprise larger amount, then Monday’s price open would have been pretty ugly indeed,” analyst Harry Tchilinguirian of Onyx Capital Group wrote on LinkedIn.
Oil traders noted that the 411,000 barrels-per-day production increase was already factored into Brent and WTI futures prices.
“The headline motive has centred on punishing OPEC+ members like Iraq and Kazakhstan that have persistently produced above their pledged quotas,” said the Commonwealth Bank of Australia in a note on Monday.
Goldman Sachs analysts forecast that OPEC+ will carry out a last production increase of 410,000 barrels per day in August.
“Relatively tight spot oil fundamentals, beats in hard global activity data, and seasonal summer support to oil demand suggest that the expected demand slowdown is unlikely to be sharp enough to stop raising production when deciding on August production levels on July 6th,” the bank said in a note dated Sunday.
Meanwhile, traders are closely monitoring how falling prices affect U.S. crude production, which reached a record high of 13.49 million barrels per day in March.
