NEW YORK :Oil prices rose by more than 2 per cent on Monday, despite producer group OPEC+ sticking with output hike plans, as wildfires burning in Canada’s oil-producing province threatened supply and President Donald Trump’s new tariff threats weighed on the U.S. dollar.
Brent crude futures climbed by $1.76, or 2.8 per cent, to $64.54 a barrel by 2:14 p.m. EDT (1814 GMT). U.S. West Texas Intermediate crude was up $1.63, or 2.68 per cent, at $62.42.
Wildfires burning in Canada’s oil-producing province of Alberta have affected about 7 per cent of the country’s overall crude oil output as of Monday, according to Reuters calculations.
At least two thermal oil sands operators south of the industry hub of Fort McMurray evacuated workers from their sites over the weekend and shut production as a precaution.
“The wildfires in Alberta are now starting to seep in,” said John Kilduff, partner at Again Capital in New York. “We are going to lose some barrels.”
Also supporting prices, the U.S. dollar slipped across the board on Monday on worries that Trump’s fresh tariff threats might hurt growth and stoke inflation.
A weaker U.S. currency makes dollar-priced commodities like oil less expensive for buyers using other currencies.
Prices were also supported by the increased geopolitical risk premium after Ukrainian drone strikes against Russia over the weekend, said Rystad Energy’s Jorge Leon.
The Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, decided on Saturday to raise output by 411,000 barrels per day (bpd) in July, the third consecutive monthly increase of that amount, as it looks to wrestle back market share and punish members that have produced more than their quotas.
Sources familiar with OPEC+ talks said on Friday that the group could discuss an even larger increase.
Oil traders said the 411,000 bpd increase had already been priced in to Brent and WTI futures.
“Had they gone through with a surprise larger amount, then Monday’s price open would have been pretty ugly indeed,” Onyx Capital Group analyst Harry Tchilinguirian wrote on LinkedIn.
Goldman Sachs analysts expect OPEC+ to implement a final 410,000 bpd production increase in August.
“Relatively tight spot oil fundamentals, beats in hard global activity data and seasonal summer support to oil demand suggest that the expected demand slowdown is unlikely to be sharp enough to stop raising production when deciding on August production levels on July 6,” the bank said in a note.
Morgan Stanley analysts also said they expect 411,000 bpd to be added back each month up to a total of 2.2 million bpd by October.
“With this latest announcement, there is little sign that the pace of quota increases is slowing,” the bank’s analysts said.
