OPEC+: OPEC+ is expected to discuss setting new production baselines for 2027 at its meeting on Wednesday, though no immediate changes to output policy are anticipated. The baselines are contentious, with some countries like the UAE and Iraq seeking higher quotas due to increased capacity, while others face production declines. The group will likely ask OPEC headquarters to prepare a mechanism to assess the 2027 baselines. On Saturday, eight OPEC+ members currently raising output may agree to another increase of 411,000 barrels per day for July, continuing the pace set in May and June. These discussions come amid efforts to unwind one layer of output cuts agreed upon since 2022, with the potential for all cuts to end by 2026 and the new baselines to guide future production levels.
Chevron in Venezuela: The Trump administration issued a narrow authorization allowing Chevron to retain its assets in Venezuela but barred it from operating oilfields, exporting oil, or expanding activities. This move follows the expiration of a broader license previously granted by the Biden administration, and aims to prevent any payments to President Maduro’s government. Chevron informed Venezuelan authorities and contractors of the new restrictions, leading to the termination of service and procurement contracts. While Chevron can maintain its presence, it's unclear if similar restrictions will apply to other foreign companies partnered with PDVSA, as Venezuela continues to struggle with low oil output amid ongoing sanctions.
Alberta Wildfires: A wildfire near Swan Hills in northern Alberta has forced the evacuation of around 1,200 residents and led to temporary shutdowns of some oil and gas operations, including 4,000 barrels per day by Aspenleaf Energy. The fire, estimated at 1,600 hectares, is burning out of control about 7 km from the town, while another smaller fire is active in Yellowhead County. Canadian Natural Resources also has facilities in the area but has not commented on the impact. These are Alberta’s first major wildfires this spring, continuing a trend of fires in recent years that have significantly disrupted oil production.
Market Overview: Oil prices are rising slightly on Wednesday as U.S. sanctions barred Chevron from exporting Venezuelan crude and Canadian production was disrupted. OPEC+ is expected to discuss production levels later in the day, with eight members possibly deciding on a July output hike during Saturday talks. Rising summer demand and flat non-OPEC+ output are strengthening the call for more supply from OPEC+. Analysts also noted that geopolitical developments, such as U.S.-Iran talks and trade negotiations, could impact oil prices further.
WTI Crude
Crude prices are up slightly Wednesday morning, and have barely pushed passed their 30 day moving average (orange) of $61.42. All eyes will be on the OPEC+ meetings taking place this week both today and on Saturday as those meetings will have big impacts on crude supply and in turn crude prices. Since the beginning of the month July WTI has been range bound between $56 and $64. Going forward look for those values to act as lines of support or resistance.
Oil prices rose over 1% on Wednesday due to supply concerns after OPEC+ decided to keep its output policy unchanged and the U.S. barred Chevron from exporting Venezuelan crude. Investors had anticipated a potential production increase, but OPEC+ instead agreed to set future baselines for 2027 without immediate changes. A separate meeting of eight OPEC+ countries on Saturday may determine a July output increase, but some analysts expect no change due to compliance issues and demand uncertainty. U.S. West Texas Intermediate crude increased by 95 cents, or 1.56%, to $61.84 a barrel. Analysts cited rising summer demand, flat non-OPEC+ output, and risks like Canadian wildfires as factors strengthening the call for more OPEC+ crude.
