On Sunday, OPEC+ members agreed to increase oil production by 547,000 barrels per day (bpd) from September in an effort to regain their market share amid growing concerns over a potential shortfall in Russian supply. By the end of the meeting, OPEC+ stated a strong global economy and low crude inventory levels as key reasons behind the decision.
The organization, which accounts for roughly half of global oil production, had been cutting output for several years to support energy prices. However, this year it changed its strategy, trying to regain the former market share. Eight OPEC+ members began ramping up crude production in April by a modest 138,000 bpd, followed by a more significant rise of 411,000 bpd in May, June, and July. In August, the group boosted supply by 548,000 bpd, and in September, it is set to add another 547,000 bpd.
The move means a full and early cancellation of OPEC+'s largest output cut, as well as a separate production increase for the United Arab Emirates (UAE) of about 2.5 million bpd, or around 2.4% of global demand.
Against this background, the Brent price dropped below $70 per barrel and began to consolidate. However, quotes are likely to fall even lower, down to $69. But the unclosed price gap at $71 will push the Brent price upward in the coming days, possibly by the end of the week.
The overall recommendation is to buy Brent.
Profits should be taken at the level of 71. A Stop Loss could be set at 68.
The volume of the opened position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance doesn’t allow opening a position of this size, it’s better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
