Oil News: OPEC Output Plans in Focus as 200-Day Sets Tone for Oil Demand

Crude Oil Holds Above 200-Day Average as Traders Watch OPEC and Demand Signals

Light crude oil futures are slightly higher on Monday, holding above the 200-day moving average at $65.17 for the fourth straight session. This technical level has become the market’s pivot, with trader reactions around it likely to define near-term direction in a market weighing geopolitical de-escalation against potential OPEC+ supply increases and fragile demand signals.

At 09:10 GMT, Light Crude Oil Futures are trading $65.50, down $0.02 or -0.03%.

Can OPEC+ Production Plans Cap Recent Oil Prices Forecasts?

Traders are pricing in OPEC+ production plans, with four delegates confirming the group is set to raise output by 411,000 barrels per day in August, following similar increases in May, June, and July. This will mark the fifth monthly boost since the group began unwinding cuts in April, keeping a lid on bullish sentiment and adding to short-term supply expectations.

The upcoming July 6 OPEC+ meeting will be closely monitored for confirmation of these hikes, as traders weigh whether the group’s steady increases could challenge the recent monthly gains of over 5% seen in June, even after last week’s biggest weekly decline since March 2023.

Easing Geopolitical Risks Strip Out Risk Premium

Geopolitical risk premiums have faded after the Iran-Israel ceasefire ended a 12-day conflict that initially spiked Brent prices above $80 before a sharp pullback to $67. Analysts at IG Markets note that the market has now stripped out most of that premium, leading to a recalibration of risk and a refocus on supply-demand balances as the primary price driver.

Weak China Demand and U.S. Rig Counts Add to Demand Concerns

Demand uncertainty remains a persistent bearish undertone, particularly with China’s factory activity contracting for the third straight month in June due to weak domestic demand and export challenges tied to U.S. trade policy.

Meanwhile, the U.S. rig count fell by six to 432 last week, marking the lowest level since October 2021, according to Baker Hughes. While this signals potential slower future U.S. supply growth, it has yet to significantly offset demand worries in the eyes of traders.

Market Forecast: Oil Prices Projections Tilt Neutral with Downside Risk

Traders should closely watch the 200-day moving average at $65.17. A sustained move above could trigger a short-covering rally toward $67.44, with a potential extension to $71.20 if momentum holds. However, failure to hold above $65.17 may lead to a test of the 50-day moving average at $62.20.

With easing geopolitical tensions and the prospect of higher OPEC+ output weighing on supply outlooks while demand concerns persist, the near-term oil prices forecast remains neutral with a slight downside risk unless clear bullish catalysts emerge.

More Information in our Economic Calendar.