| Commoditiy | Price | Weekly Change | 50day-Ave | 100day-Ave | 200day-Ave |
|---|---|---|---|---|---|
| Brent ($/b) | 68.05 | 0.44 | 66.85 | 68.57 | 71.80 |
| US WTI ($/b) | 66.34 | 0.82 | 63.98 | 65.63 | 68.51 |
| ICE Gasoil ($/MT) | 751.00 | 74.00 | 648.25 | 653.08 | 671.39 |
| Jet CIF NWE ($/MT) | 727.75 | 28.12 | 685.28 | 691.11 | 711.21 |
8 OPEC+ members met this weekend and agreed to a further increase in output for August. They have agreed an increase of 548 kb/d compared to the level they agreed for July. This is more than the increase from May to June and June to July, which had been 410 kb/d. The increases in output represent the unwinding of some of the additional voluntary cuts agreed by the 8 key OPEC+ members. These were supposed to follow a schedule of unwinds published in December last year. The 410 kb/d increase represented 3 months of increases from that schedule, whereas the increase for August equates to 4 months and would bring targets to a level that was originally intended to be reached in May 2026. We would not expect output to actually increase by anything like that much though as several members are already producing well ahead of their targets. For Saudi Arabia it is likely to lead to an increase in output of around 200 kb/d. If the 8 members agree to the same increase for September this would be the amount required to fully unwind the 2.2m barrels of the additional voluntary cuts implemented in 2023.
This increase is more than the market was expecting, so that is a surprise although it won’t lead to that much extra supply. Interestingly Saudi Aramco has this weekend published its Official Selling Prices for August which provide the spreads to benchmarks at which Saudi Arabia markets its crude, and this was increased by around 1 $/b to the key Asian markets. This indicates that Saudi Arabia expects no difficultly in selling its crude despite the increased volume and there is no sign of a market share strategy here. Crude inventories have also been falling in Cushing, one of the key storage hubs in the US, so no sign of oversupply in the market here either.
The market fell a little overnight, Brent close to 67 \$/b, but this is within the recent tight range, and it is back to 68.40 \$/b now. The market may have taken confidence from Saudi Arabia increasing Official Selling Prices. There could be a lot for markets to consider on the trade front this week as Trump’s 9th July deadlines for agreement on tariffs runs out. Over the weekend he said that letters would be going out to some countries today. He also said that countries aligning themselves with what he called “the Anti-American policies" of the BRICS developing nations, will be charged an extra 10% tariff, with no exceptions to be granted. So, it might be that oil takes its direction from the broader reaction to this news on trade rather than the 8 OPEC+ members’ decision. The 50-day moving average provides support around 67 \$/b. Below that is support at around 65 \$/b from before the Iran-Israel conflict. On the upside, the 100-day resistance at is at 68.50 \$/b, with a possibility of a test on 70 \$/b if that is broken.
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