Oil jumps after OPEC+ sticks to same output hike in July versus June
SINGAPORE: Oil prices rebounded more than $1 a barrel on Monday after producer group OPEC+ decided to increase output in July by the same amount as it did in each of the prior two months, which came as a relief to those who expected a bigger increase.
Brent crude futures climbed $1.34, or 2.13%, to $64.12 a barrel by 0346 GMT after settling 0.9% lower on Friday. U.S. West Texas Intermediate crude was at $62.31 a barrel, up $1.52, or 2.5%, following a 0.3% decline in the previous session.
Both contracts were down more than 1% last week.
The Organization of the Petroleum Exporting Countries and their allies decided on Saturday to raise output by 411,000 barrels per day in July, the third month the group known as OPEC+ increased by the same amount, as it looks to wrestle back market share and punish over-producers.
The group had been expected to discuss a bigger production hike.
'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 said the 411,000-bpd output hike had already been priced into Brent and WTI futures.
'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.
Oil prices fall on demand concerns in volatile session
Kazakhstan has informed OPEC that it does not intend to reduce its oil production, according to a Thursday report by Russia's Interfax news agency citing Kazakhstan's deputy energy minister.
Looking ahead, Goldman Sachs analysts anticipate OPEC+ will implement a final 0.41 million bpd production increase 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, low levels of U.S. fuel inventories have stoked supply jitters ahead of expectations for an above-average hurricane season, analysts said.
'More encouraging was a huge spike in gasoline implied demand going into what's considered the start of the U.S. driving season,' ANZ analysts said in a note, adding that the gain of nearly 1 million bpd was the third-highest weekly increase in the last three years.
Traders are also closely watching the impact of lower prices on U.S. crude production which hit an all-time high of 13.49 million bpd in March.
Last week, the number of operating oil rigs in the U.S. fell for a fifth week, down four to 461, the lowest since November 2021, Baker Hughes said in its weekly report on Friday.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
2 hours ago
- Business Recorder
Oil steady after US stockpile build, Saudi Arabia price cuts
LONDON: Oil prices steadied on Thursday after falling more than 1% the previous day because of a build in U.S. gasoline and diesel inventories and cuts to Saudi Arabia's July prices for Asia. Brent crude futures were up 23 cents, or 0.35%, at $65.09 a barrel by 1148 GMT. U.S. West Texas Intermediate crude gained 16 cents, or 0.25%, to $63.01 a barrel. Oil prices closed around 1% lower on Wednesday after official data showed that U.S. gasoline and distillate stockpiles grew more than expected, reflecting weaker demand in the world's largest economy. Geopolitics and the Canadian wildfires, which can reduce oil roduction, provide price support despite a potentially over-supplied market in the second half of the year with expected OPEC+ production hikes, PVM analyst Tamas Varga said. Adding to the weakness, Saudi Arabia, the world's biggest oil exporter, cut its July prices for Asian crude buyers to nearly the lowest in two months. The price cut by Saudi Arabia followed the OPEC+ move over the weekend to increase output by 411,000 barrels per day (bpd) for July. Oil eases after US data shows large builds in fuel stocks The strategy of OPEC's de facto leader Saudi Arabia is partly to punish over-producers by potentially unwinding 2.2 million bpd between June and the end of October, in a bid to wrestle back market share, Reuters previously reported. 'Oil demand will be shaped by trade negotiations between the US and its trading partners,' PVM's Varga said. Data on Wednesday showed that the U.S. services sector contracted in May for the first time in nearly a year. On the trade front, U.S. President Donald Trump said on Wednesday that China's Xi Jinping was tough and 'extremely hard to make a deal with', exposing friction between Beijing and Washington. Investors will watch U.S. economic data such as payrolls, which may influence the U.S. Federal Reserve's interest rate policy, while focus will be also on geopolitical tensions in the Middle East, UBS analyst Giovanni Staunovo said.
Business Recorder
3 hours ago
- Business Recorder
Goldman Sachs pares risk after tariff move, braces for more uncertainty
NEW YORK: Goldman Sachs has moderated its risk-taking since U.S. President Donald Trump's April tariff announcement, and the Wall Street bank is braced for more uncertainty, a top executive said. 'We have moderated our risk positioning since April 2nd – I think that's a sensible thing for us to do,' Goldman President John Waldron said in a podcast released by the investment bank on Thursday. 'We're absorbing a lot of risk from our clients. We want to continue to do that, but we also, where we can, we (pare) our risk and stay a little bit closer to home.' Goldman is readying for continued uncertainty in the coming months, which means keeping a greater liquidity cushion, he said. Financial markets have been turbulent since Trump's so-called 'Liberation Day,' when he announced plans to increase tariffs on trading partners. Waldron, who is widely seen as the likely successor to Goldman CEO David Solomon, said the tariff move was 'very, very disruptive.' Goldman Sachs sees OPEC+ raising oil output by 0.41 mb/d in August Some companies are now starting to make business decisions based on assumptions that tariffs will be raised to a range of 10% to 15%, he said. 'We're moving into now an adjustment phase, and you'll see, I think, some more decision-making on capital spend, M&A transactions, capital return, stock buybacks,' Waldron said. The U.S. economy is still strong, backed by a solid labor market and consumer spending, he said. 'All those factors in the U.S. to me lead to a likely scenario where we don't have a recession,' he said. Meanwhile, Waldron warned investors were getting concerned about an unsustainable U.S. fiscal deficit. 'The bond market is starting to be heard, and I hope that gets some attention in the halls of Congress,' he said. Rating agency Moody's cut the pristine U.S. sovereign credit rating by one notch last month, the last of the major ratings agencies to downgrade the country, citing concerns about the nation's growing $36 trillion debt pile. The biggest question for markets is the path of interest rates, particularly in the long term, Waldron said. 'We're seeing a lot of increase in duration in the rate curves in the United States and Japan and many other countries - and I think that could be a brake on economic growth,' he said.
Business Recorder
3 hours ago
- Business Recorder
Wheat up 2-4 cents, corn up 1-3 cents, soy down 2-4 cents
CHICAGO: The following are U.S. expectations for the resumption of grain and soy complex trading at the Chicago Board of Trade at 8:30 a.m. CDT (1330 GMT) on Thursday: Wheat - Up 2 to 4 cents per bushel CBOT wheat rose amid concerns over escalating attacks between grain exporters Ukraine and Russia, analysts said. Russia said it will respond to Ukraine's latest attacks as and when its military sees fit. The U.S. Department of Agriculture reported net weekly export sales reductions of 49,100 metric tons for 2024-25 and net weekly export sales of 444,900 metric tons for 2025-26. Analysts had expected net cancellations of 200,000 metric tons to net sales of 100,000 metric tons for 2024-25. They expected net sales of 300,000 to 800,000 metric tons for 2025-26. CBOT July soft red winter wheat was last up 2-1/2 cents at $5.45-3/4 per bushel. K.C. July hard red winter wheat was last up 1/4 cent at $5.40-3/4 per bushel, and Minneapolis July spring wheat was up 1/4 cent at $6.24-3/4 per bushel. Wheat rises for 2nd session on Black Sea, China supply woes Corn - Up 1 to 3 cents Technical buying and U.S. export demand underpinned CBOT corn, analysts said. The USDA reported weekly U.S. export sales of 942,300 metric tons for 2024-25 and 160,100 metric tons for 2025-26. Analysts expected 775,000 to 1.4 million metric tons for 2024-25 and 20,000 to 250,000 metric tons for 2025-26. South Korean importers bought corn in international tenders, with some expected to be sourced from the U.S. Pacific Northwest, European traders said. CBOT July corn was last up 3 cents at $4.41-3/4 per bushel. Soybeans - Down 2 to 4 cents CBOT soybeans retreated with soyoil and soymeal. Concerns about Washington's trade war with China, the world's biggest soybean importer, hung over futures. Chinese President Xi Jinping held talks with U.S. President Donald Trump by phone, the official Xinhua news agency reported on Thursday. Weekly U.S. soybean export sales were 194,300 metric tons for 2024-25 and 3,500 metric tons for 2025-26, the USDA said. Analysts expected 100,000 to 500,000 metric tons for 2024-25 and zero to 100,000 metric tons for 2025-26. CBOT July soybeans were last down 3-1/4 cents at$10.41-3/4 per bushel.
