More Oil, but Not Cheaper

#XTIUSD

Key zone: 61.50 - 63.50

Buy: 63.50 (on strong positive fundamentals); target 65.50-66.50; StopLoss 62.80

Sell: 61.50 (after a retest of 62.50); target 60.00-59.50; StopLoss 62.20

The cartel is keeping control of the market: a decision was made to raise production targets by 137K barrels per day, meaning the previously announced output cut of 1.65M barrels per day is ahead of schedule. Recall: earlier the Alliance increased production targets by 2.5M barrels per day from April through September.

The adjustment is explained by the combination of steady demand and moderate supply shortage, as reserves in major economies remain at multi-year lows, while fuel consumption in Asia and the Middle East continues to show sustainable growth.

In addition, yesterday a compensation schedule was published for members of the cartel who previously exceeded their production quotas. The schedule runs through June 2026 and requires monthly cuts in the range of 190K to 829K barrels per day to meet target levels.

The bulk of these compensation cuts will come from Kazakhstan, which consistently produces above its quota. Among OPEC+ members, only Saudi Arabia and Algeria have complied with their limits.

Although markets currently interpret OPEC+’s decision negatively – as readiness to escalate the battle for market share – it is unlikely to trigger a major price collapse. The most probable scenario for Brent and WTI is a wide sideways range between $65–70 per barrel, since moderate output growth is balanced by strong demand. Of course, this holds unless new large-scale geopolitical or economic shocks, or escalation of trade wars, occur.

For example, Russia just carried out its most aggressive airstrike since the start of the war in Ukraine, raising the likelihood of new U.S. sanctions against energy exports. This could reduce supply and create a safety cushion for higher prices. Any new conflicts (e.g., with Venezuela) could also support the market by adding to the geopolitical risk premium in prices.

Both benchmarks started the week with a small correction but have already returned to the medium-term downtrend.

At the moment, WTI is consolidating in the $63.00–63.50 zone. A breakout above $63.50 would open the way toward $66–67.50. Strong support is located at $62, with deeper demand likely around $60.50.

So we act wisely and avoid unnecessary risks.

Profits to y’all!