Oil rises after OPEC+ decision to increase production in July

Oil prices rose by more than $1 a barrel on Monday after the OPEC+ group decided to increase production in July by the same amount it increased in each of the previous two months, in line with market expectations.

Brent crude futures rose $1.19, or 1.9%, to $63.97 a barrel by 0044 GMT, after closing down 0.9% on Friday. U.S. West Texas Intermediate crude was trading at $62.09, up $1.30, or 2.14%, after falling 0.3% in the previous session. Both benchmarks are down more than 1% for the week.

This comes after the Organization of the Petroleum Exporting Countries (OPEC) and its allies decided on Saturday to increase production by 411,000 barrels per day in July, the third consecutive month of such an increase, as the group, known as OPEC+, seeks to regain market share and punish those who exceed its production quotas.

The group was expected to discuss a further production increase. “If they had decided to increase production more suddenly, the opening price would have been very bad,” said analyst Harry Tchilinguirian of Onyx Capital Group.

Oil traders said the decision to increase production by 411,000 barrels per day (bpd) was already priced into Brent and West Texas Intermediate (WTI) futures, which fell more than 1% last week.

Analysts expected that low US fuel inventories would fuel supply concerns ahead of forecasts for an above-average hurricane season.

“Even more encouraging was the significant increase in gasoline demand with the start of the US driving season,” analysts at ANZ Bank said in a note. They added that the increase of nearly 1 million bpd was the third-highest weekly increase in the past three years.

Traders are closely monitoring the impact of lower prices on US crude oil production, which reached an all-time high of 13.49 million bpd in March.