Oil prices surged higher on Monday in a move which saw front-month WTI gain over 3% in early trade. The rally followed the weekend announcement from OPEC+ that they would increase output by a further 411,000 barrels per day (bpd) in July.
This is the third consecutive month when the group has raised production by 411,000 bpd as it seeks to unwind previous production cuts.
Traders had feared that OPEC+ would announce a significantly larger increase in production, and this helped to account for prices gapping higher in overnight trade. Prices were also lifted by the increased military activity between Ukraine and Russia reported over the weekend.
In addition, there were reports that the US may impose stricter sanctions on Moscow, and this helped boost prices.
Front-month WTI appears to have found some support around $60 per barrel. But it does look rather flimsy. A break below this level could see prices head back towards $55, a price which represents a multi-year low, but which has itself acted as support in both April and May.
Source: TradingView
There’s always a chance that oil manages to break higher. But recently, rallies have tended to run out of steam relatively quickly.
For around two months now, WTI has struggled for oxygen every time it managed to climb above $64.
