Post by : Mariam
Al-Faris
Photo: Reuters
On Monday, oil prices went up by around 3% after the group of oil-producing countries called OPEC+ decided to keep their oil production increase for July the same as the previous two months.
Brent crude oil prices rose by $1.74, or 2.77%, reaching $64.52 per barrel early Monday. Meanwhile, U.S. West Texas Intermediate (WTI) crude went up by $1.94, or 3.19%, to $62.73 per barrel.
Last week, both Brent and WTI prices had dropped by more than 1%.
OPEC+ announced on Saturday that they will raise oil production by 411,000 barrels per day in July. This is the third month in a row they are increasing output by this amount. Their goal is to regain market share and penalise countries that produce more oil than their allowed quotas.
Before the announcement, some sources said OPEC+ might decide to increase production even more. But oil traders say the 411,000 barrels per day increase was already expected and included in the current prices.
Harry Tchilinguirian, an analyst at Onyx Capital Group, said if OPEC+ had surprised the market with a bigger increase, oil prices might have fallen sharply on Monday.
Kazakhstan told OPEC it does not plan to cut its oil production, according to reports from Russia's Interfax news agency.
John Evans, an analyst at PVM, said that because Kazakhstan won’t reduce output and because OPEC+ is losing market share, the decision to keep production steady was understandable.
Goldman Sachs expects OPEC+ to increase production again by around 410,000 barrels per day in August.
The bank also said that strong global economic activity and summer demand for oil suggest production will keep rising despite expectations of slower demand.
In the U.S., low fuel supplies and worries about a busy hurricane season have made people concerned about oil supply.
ANZ analysts noted a big jump in gasoline demand — almost 1 million barrels per day — as the U.S. driving season begins. This was one of the biggest weekly increases in the last three years.
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