Oil rebounds after OPEC+ sticks to same output hike in July versus June

Oil prices rebounded more than $1 a barrel on Monday after OPEC+ decided to increase output in July by the same amount as it did in each of the prior two months, in line with market expectations.

Brent crude futures climbed $1.19, or 1.9%, to $63.97 a barrel by 0044 GMT after settling 0.9% lower on Friday. U.S. West Texas Intermediate crude was at $62.09 a barrel, up $1.30, or 2.14%, following a 0.3% decline in the previous session. Both contracts were down more than 1% for the week.

The Organization of the Petroleum Exporting Countries and their allies decided on Saturday to raise output by 411,000 barrels per day in July, the third month the group known as OPEC+ increased by the same amount, as it looks to wrestle back market share and punish over-producers.

The group had been expected to discuss a bigger production hike.

"Had they gone through with a surprise larger amount, then Monday's price open would have been pretty ugly indeed," analyst Harry Tchilinguirian of Onyx Capital Group wrote on LinkedIn.

Oil traders said the 411,000-bpd output hike had already been priced into Brent and WTI futures.

Looking ahead, low levels of U.S. fuel inventories have stoked supply jitters ahead of expectations for an above-average hurricane season, analysts said.

"More encouraging was a huge spike in gasoline implied demand going into what's considered the start of the U.S. driving season," ANZ analysts said in a note, adding that the gain of nearly 1 million bpd was the third-highest weekly increase in the last three years.

Traders are also closely watching the impact of lower prices on U.S. crude production which hit an all-time high of 13.49 million bpd in March.

Last week, the number of operating oil rigs in the U.S. fell for a fifth week, down four to 461, the lowest since November 2021, Baker Hughes said in its weekly report on Friday.