- WTI hit new three-month highs near $121 earlier in the session, but has since pulled back to $118.50.
- Oil prices were initially buoyed on Monday by the Saudi rally, China’s easing of the lockdown and following last week’s OPEC+ meeting.
Having nearly hit the $121 a barrel mark earlier in the day and in doing so hitting new three-month highs, WTI futures first month have decreased in recent operations. WTI last traded at $118.50 and was down around $1.50 on the session as boosted by this weekend’s news of Saudi official selling price (OSP) hike to big Asian clients has vanished.
But WTI is still trading more than $7 above last week’s lows following OPEC+’s decision to increase the pace of production quota increases in July and August to 648,000 barrels a month from 432,000. This decision has not had a lasting effect on prices, as the largest production shares have been spread evenly among OPEC+ members, many of whom will not be able to substantially increase production in practice (including Russia, which continues to face to harsh Western sanctions).
JP Morgan noted in a note on Monday that it only believes OPEC+ it will increase production by 160-170,000 net barrels per day in July and August, well below the target announced by the cartel. Overall, expectations that crude markets remain very tight should keep WTI in the high $110.50s and near $120s for now, especially in light of the weekend’s new announcements that Major Chinese cities will continue to ease their lockdowns, boosting demand in the world’s second-largest oil-consuming nation.
Technical levels
Source: Fx Street
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