Jun 06, 2022 03:10AM ET
By: AnalysisWatch
Oil futures gained on Monday, with Brent crude rising above $120 a barrel after Saudi Arabia raised prices for its July crude sales, indicating tight supplies even after OPEC+ producers agreed to increase output over the next two months.
Brent crude was up 68 cents, or 0.6%, at $120.40 a barrel at 02:40 AM ET, having earlier touched an intraday high of $121.95, extending Friday's 1.8% gain.
West Texas Intermediate (WTI) crude futures in the United States rose 61 cents, or 0.5%, to $119.48 per barrel after earlier reaching a three-month high of $120.99. It had gained 1.7% on Friday.
State-owned oil producer Aramco said Sunday it had raised the official selling price (OSP) for its key Arab light oil exports to Asia by $2.10 in July from June to a premium of $6.50 over the average of the Oman and Dubai benchmarks.
The July OSP is the highest since May, when prices hit an all-time high on fears of supply disruptions from Russia over sanctions related to the invasion of Ukraine.
The price rise came despite last week's decision by the Organization of Petroleum Exporting Countries (OPEC+) and its allies to increase output by 648,000 barrels per day, or 50% more than planned, in July and August.
Iraq said Friday it planned to increase production to 4.58 million barrels per day in July.
Oil producers are "making hay while the sun shines," said Avtar Sandu, commodities manager at Phillip Futures in Singapore, adding that summer demand in the U.S. and the easing of COVID-19 freezes in China are expected to keep prices high.
OPEC+'s decision to bring forward production increases is widely seen as unlikely to meet demand as the increased allocation is spread across all members, including Russia, which is under sanctions.
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