Oil prices jumped over 2% during Asian trade on Monday after the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) decided to maintain its pace of output increases into July, easing market concerns over a potentially larger hike.
By 3:25 pm AEST (5:25 am GMT) Brent crude futures were up US$1.54 or 2.5% to US$64.32 per barrel, while U.S. West Texas Intermediate rose $1.75 or 2.9% to $62.54 per barrel.
The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) agreed to increase production by 411,000 barrels per day in July, matching the hikes made in May and June as the group seeks to reclaim market share and rein in members exceeding quotas.
ANZ analysts wrote in a note to clients: "The move suggests OPEC has abandoned its strategy of supporting prices in favour of punishing members, such as Kazakhstan and Iraq, who have been producing above their agreed quotas.
"The move should also help OPEC recover market share lost to the US oil shale producers, who are not considering paring back drilling activity and output amid the low prices.
"The market now looks decidedly soft in coming months, despite the start of the ‘driving season’ in the northern hemisphere. This should put downward pressure on prices this week."
Meanwhile, U.S. crude output remains high, hitting a record 13.49 million barrels per day in March according to the Energy Information Administration's Petroleum Supply Monthly report.
Baker Hughes reported on Friday that the number of active U.S. oil rigs fell for a fifth straight week, dropping by four to 461 - the lowest level since November 2021.
