OPEC+ is expected to approve an increase in oil production by about 550,000 barrels per day for September, according to a Reuters report. This change will return 2.17 million barrels per day that were previously cut. The plan also includes a 300,000 barrels per day increase for the UAE’s production quota. This was anticipated, so its effect on oil prices should be minimal.

Managing Oil Supply

The article describes a careful move by the oil-producing group to gradually lift past supply cuts. Essentially, they are restoring around half a million barrels a day in September, following earlier plans to recover over two million barrels per day. The goal is to manage supply to stabilize the market without overwhelming it. The increase aims to maintain some control over prices and prevent disruptions. The UAE’s share of production is increasing by about 300,000 barrels per day, which was expected. Since there were no surprises regarding timing or scale, we do not anticipate an immediate impact on spot prices. The market seems to have factored this in already. For those trading oil derivatives, the key now is how these changes might affect future price curves. With September’s output mostly decided, front-month contracts may see little volatility unless something new arises. The focus should shift toward the longer-term, as traders adjust to new balances into the fourth quarter.

Market Dynamics Focus

We should also pay attention to refinery margins and product inventories, particularly in areas where summer demand might drop. While the overall supply seems to be increasing, the actual effect on prices will depend on product stock levels and demand. Keep an eye on refinery maintenance schedules, as they can impact product output and shift demand for crude oil itself. In the coming week, price movements may stay steady unless new inventory data or geopolitical risks arise. Traders dealing with spread structures should be ready for changes between nearby and deferred contracts. With supply commitments clearer now, pricing will likely be influenced more by demand uncertainties and transport challenges. Watch floating storage volumes and shipping rates, as they can quickly impact physical markets. We also need to consider how economic data from the US and China influences the energy market. If economic reports are weaker than expected, demand forecasts may be adjusted, widening calendar spreads. Conversely, stronger-than-expected data might lead traders to price deferred barrels higher, especially with potential demand increases in winter. Overall, with the September production changes now known, the focus shifts to whether the expected volumes will actually be delivered. Export and load-out data from major terminals will indicate compliance or discrepancies. Differences in the physical market will provide clarity, and any gaps could create short-term trading opportunities, particularly for those involved in regional grades. The impact is likely to be felt more in contracts linked to physical oil than in major benchmarks like Brent or WTI, so refining margins and regional balances should remain in focus. Create your live VT Markets account and start trading now.

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