WTI Oil Slips to 100-day MA Following OPEC + Output Hike. What Next?

[Redator]

Most Read: Markets Weekly Outlook – US Services PMI, Bank of England rate decision and Canadian/NZ Employment

Oil prices continued their slide from the back end of last week as the rumors about an OPEC + output hike were confirmed on the weekend. WTI Oil hit a daily low around the 65.44 handle before bouncing to trade at 66.68 at the time of writing.

Is the OPEC + Production Hike a Strategy Play?

OPEC + have for the best part of the last 4 years since the Covid pandemic stuck to the line of ‘price stability’. However since the election of US President Donald Trump who pledged lower Oil prices and urged American companies to drill even more, they appear to have pivoted strategies.

Looking in from the outside, the output hikes this year have been largely down to an attempt at gaining a greater market share as fears rose that Oil prices may fall. A few months ago, it would have been bold to predict that OPEC+ could increase oil production by 2.5 million barrels per day and still keep prices steady at around $70 a barrel.

The eight OPEC+ members met online on Sunday and agreed to increase oil production by 547,000 barrels per day (bpd) for September. This adds to earlier increases of 548,000 bpd in August, 411,000 bpd in May, June, and July, and 138,000 bpd in April, which started the process of reversing their voluntary production cuts.

OPEC+ said these increases were justified by a strong global economy and low oil supplies. However, this claim is questionable, as demand in Asia, the largest oil-importing region, has been weak.

Asia's oil imports dropped to 25.0 million bpd in July, down from 27.88 million bpd in June, marking the lowest monthly total since July last year, according to LSEG Oil Research.

China, the world's biggest oil importer, has been buying more oil recently, but this is likely due to lower prices when the shipments for June and July were arranged.

Additionally, China has probably been building up its oil reserves quickly. While China doesn't share inventory data, it had a surplus of 1.06 million bpd in the first half of 2025 after accounting for domestic production and imports versus refinery use.

Source: LSEG

In my humble opinion, it could be either a combination of luck and good timing or outstanding strategy that every OPEC + hike has come at a time when risks to the Oil market have been supporting prices.

The current hike comes just as the US has announced trade deals which had at least to some degree quelled market fears around slower demand in H2 2025. This may or may not be the case but for now, OPEC + appears to be winning.

BP Makes Largest Oil and Gas Discovery in 25 Years

BP announced on Monday that it has made its biggest oil and gas discovery in 25 years off the coast of Brazil. This is a major win for the company as it shifts its focus back to fossil fuels after moving away from renewable energy.

The discovery, called Bumerangue, is expected to become a key production hub for BP. A spokesperson said it’s likely BP’s largest find since the Shah Deniz gas field in the Caspian Sea in 1999.

By 11:07 GMT, BP’s shares rose 1.3%, outperforming the broader European energy index, which was up just 0.1%. BP acquired the Bumerangue block in deep waters of Brazil’s Santos basin in December 2022 under favorable terms.

Initial findings show high levels of carbon dioxide in the block, but BP said more analysis and further drilling in Brazil will provide a clearer picture of its potential.

Looking Ahead

Oil prices appear to be in a consolidation phase for now. A breakout appeared to be on the cards last week but the lack of follow through on trade deals between the US and trading partners remains a stumbling block.

The recent disagreements between the US-India and news that the US-EU trade deal may not be done are adding complications to a potential Oil rally and will need to be monitored in the coming days.

Any moves against Russian Oil by the Trump administration may also becomes an area of focus in the days ahead.

Technical Analysis - WTI

From a technical analysis standpoint, Oil continues is back at the 100-day MA having consolidated between the 100 and 200-day MA for the majority of July before a breakout last week.

The breakout however proved to be short-lived as rumors began to swirl around a possible OPEC + output hike which came to fruition over the weekend.

The outlook moving forward remains complex for now and a move higher may struggle to break above last week's highs at 70.50.

For now, immediate resistance is provided by the 200-day MA at 68.04 before last weeks highs at 70.50 and swing high in March around 71.38 come into play.

On the downside we have support at the 66.15 area before the 100-day MA at 65.18 comes into focus.

WTI Oil Daily Chart, August 4, 2025

Source: TradingView (click to enlarge)

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

Opinions are the authors'; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. The provided publication is for informational and educational purposes only.
If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please refer to the MarketPulse Terms of Use.
Visit https://www.marketpulse.com/ to find out more about the beat of the global markets.
© 2025 OANDA Business Information & Services Inc.