Crude Oil Forecast: OPEC+ in Focus as 3-Month Price Rally Looks to Extend into July

• Crude oil prices look to extend multi-month rally into July

• OPEC+ ministers meet today to decide on August production

• Technical outlook biased for further upside on momentum

Aided by a robust global recovery and a disciplined OPEC+ production schedule, crude oil prices extended 10.78% higher in June, capping off an impressive three-month rally. The Organization of Petroleum Exporting Countries and allies, otherwise known as OPEC+, will meet today to announce the groups August production target.

Analysts are expecting the cartel to boost output by anywhere from 500,000 to 1 million barrels per day. However, some expect the group to remain more disciplined in the face of rising Covid cases across key economies, with the highly transmissible Delta variant being of notable concern. If that scenario plays out – being no increases announced for August – it would more than likely send oil prices rocketing higher.

The markets are likely taking a moderate approach between the forecasted production increases and none at all. That said, if a decision of 500,000 barrels per day crosses the wires, oil prices may very well have a subdued reaction. Saudi Arabia will likely advocate for the supply side of the market to remain tight. Russia, on the other hand, prefers to send more oil into the market.

Outside the initial reaction, and regardless of the OPEC+ decision altogether, prices will likely continue to trade higher through the summer months as demand continues to increase. That said, the Delta variant is quickly spreading and poses a serious threat to oil-hungry economic activity, particularly travel. Australia, among other countries, has seen another round of lockdowns enacted by policy makers. Governments are frantically moving to vaccinate their populations to avoid those economically crippling measures.

Crude oil has moderated this week, likely in anticipation of the OPEC decision. June closed out with a solid gain after the month began with a breakout higher from an Ascending Triangle pattern. Since then, the 9-day Exponential Moving Average (EMA) has helped guide prices higher. The 161.8% Fibonacci extension appears to be acting as a level of resistance. A break higher will put the October 2018 high on display, which appears almost inevitable considering the energy commoditys recent momentum.