West Texas Intermediate (WTI) futures on the NYMEX climbed back up to nearly $65.50 during the European trading session on Monday. This recovery occurred despite OPEC+ announcing a larger-than-expected increase in oil production from August, planning to raise output by 548,000 barrels per day, much higher than the anticipated 411,000 barrels per day. Typically, an increase in oil production can push prices down. However, optimism surrounding new US trade deals helped support oil prices. US Treasury Secretary Scott Bessent mentioned that several trade agreements might be finalized soon.

US Trade Developments

The US is close to solidifying a trade agreement with India, but no official announcement has been made yet. If US trade deals decrease, this could harm oil demand. US President Donald Trump intends to announce new tariff rates starting Monday. WTI Oil is a type of crude oil that serves as a benchmark in global markets. It is known for its high quality, being both light and sweet, with low gravity and sulfur content. Sourced from the US and traded mainly in US dollars, a weaker dollar can make oil cheaper for other buyers. OPEC’s decisions heavily influence WTI prices. Usually, an increase in production leads to lower prices. Weekly oil inventory reports from the American Petroleum Institute (API) and the Energy Information Administration (EIA) also affect prices by indicating changes in supply and demand. Recently, WTI crude bounced back toward the $65.50 mark even after OPEC+’s surprising announcement. The group revealed an output increase of 548,000 barrels per day starting in August, which exceeds the previous estimate of 411,000 barrels. Normally, such a rise would pressure futures downward, but this time was different. Optimism around trade developments, especially from Washington, provided some support for oil prices. Bessent’s comments about potential US trade agreements gave markets hope, redirecting focus from what could have led to heavier selling. There’s particular attention on the ongoing negotiations between Washington and New Delhi, with hopes of a finalized agreement, although nothing official has been announced yet.

Impact of Tariffs and Currency

However, some risks remain. The administration has warned about new tariffs, which could complicate the situation. A decline in trade connections might negatively affect oil demand, especially in industries reliant on fuel for production and transport. If finalized agreements take too long, anxiety may rise again. Currency movements are also crucial, as the US dollar can affect oil prices. Since oil is priced in dollars, a weaker dollar can make it more attractive to investors holding other currencies. This may have helped support crude prices even as supply conditions changed. We also pay close attention to weekly reports from the API and EIA. These reports provide snapshots of stockpile levels and reflect short-term supply and demand sentiment. Rising inventories suggest lower consumer demand or broader economic weakness, while decreasing inventories indicate the opposite. Such visibility often guides derivatives traders, especially regarding futures volume. Despite this, OPEC+’s production plans cannot be overlooked. Their commitment to increase output highlights the need for strong demand to sustain prices. Global economic stability and growth in major economies will need to help pick up any slack. If consumption drops while production increases, price momentum could shift quickly. Given the current situation, long-term contracts may show rising uncertainty. In the short term, we expect traders to react strongly to the API and EIA data, evaluating whether stock changes support or challenge the current recovery in spot prices. These fluctuations may provide tactical opportunities, particularly when linked with macroeconomic news or changes in tariff policy. From our perspective, market participants should remain alert to economic signals and guidance from major producers. Additionally, fluctuations in the dollar could play a significant role in market sentiment, especially with central bank actions coming into focus worldwide. Monitoring volatility and storage developments is also essential. Create your live VT Markets account and start trading now.

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