Market News

Oil (BZ=F, CL=F)

Oil prices surged on Monday morning, after the Organization of the Petroleum Exporting Countries and its allies – known as OPEC+ – announced an increase to output for July that was in line with expectations.

Brent crude futures (BZ=F) jumped 2.6% to $64.39 a barrel, at the time of writing, while West Texas Intermediate futures (CL=F) were up 3% at $62.63 a barrel.

OPEC+ said in a statement on Saturday that its eight participating countries had agreed to increase output by 411,000 barrels per day.

Jim Reid, a market strategist at Deutsche Bank, said: "An increase of this magnitude was flagged on the wires on Friday afternoon and there was some prospect of it being higher than this.

He said that oil futures were higher on Monday morning "in a relief that the output increase wasn't higher."

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ING's head of commodities strategy, Warren Patterson, and commodities strategist Ewa Manthey said: "The latest increase is in line with our expectations. We’re also assuming that OPEC+ will continue with these large supply hikes.

"Rising tensions between Russia and Ukraine added further support to the market this morning. Ukraine carried out large-scale drone attacks on several Russian airfields, which comes ahead of peace talks between Russia and Ukraine this week. In addition, some US senators are pushing for harder sanctions against Russia, with a proposal to impose 500% tariffs on imports from countries that buy Russian oil.

"While president Trump appears to be increasingly frustrated with president Putin, he’s so far been reluctant to impose additional sanctions. Actions that successfully target Russian oil flows will change the outlook for the oil market drastically."