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Oil Prices Rebound: Can the ETF Rally Last?

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Oil prices rebounded on Jun 1, 2025, after OPEC+ announced it would raise output in July by 411,000 barrels per day, maintaining the same monthly increase as in May and June. The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, agreed on May 30, 2025, to implement another production increase of 411,000 barrels per day for July.

This marks the third consecutive month of output hikes of the same magnitude. The decision appears to be aimed at regaining market share and imposing discipline on member states that have exceeded production targets.

While a larger increase had been speculated, the group ultimately chose to stick with the expected level. If OPEC+ had gone for a surprise hike, oil prices would have slumped remarkably. United States Oil Fund LP (USO - Free Report) and United States Brent Oil Fund LP (BNO - Free Report) gained about 5% and 3.3% past month, respectively (as of May 30, 2025).

Supply Concerns Lurking Ahead?

According to oil traders, the 411,000 barrels per day increase had already been priced into Brent and WTI futures, which helped avoid volatility and contributed to the modest rebound in prices. Looking ahead, analysts noted that low levels of U.S. fuel inventories have heightened concerns about supply, especially with the Atlantic hurricane season expected to be more active than usual.

Despite U.S. crude oil production reaching a record high of 13.49 million barrels per day in March, signs of a slowdown are emerging. The number of operational oil rigs in the United States fell for a fifth successive week, dropping by four to 461—the lowest level recorded since November 2021.

Goldman Sachs Expects Final Hike in August

In a note dated Sunday, Goldman Sachs cited relatively tight spot market conditions, stronger-than-expected global economic activity, and seasonal support for oil demand as key factors likely to drive this decision, as quoted on Reuters. The group is expected to finalize its August output plans at its July 6 meeting.

Revised Demand and EV Trends Support Stability

Goldman Sachs also pointed to several factors supporting its outlook. These include upward revisions to historical oil demand estimates for Africa by the International Energy Agency (IEA), stronger-than-anticipated consumption trends in Europe, and a less aggressive adoption of electric vehicles in Western markets. Combined, these elements are expected to moderately boost demand, helping to balance the market as OPEC+ continues to raise output.

Cautious Long-Term Price Outlook

Despite the current tightness in the oil market, Goldman Sachs maintained a conservative forecast for oil prices. The bank expects Brent crude to average $60 per barrel and WTI to average $56 per barrel for the remainder of 2025.

For 2026, it projects Brent prices at $56 and WTI at $52 per barrel. These projections are based on expectations of significant supply growth outside the U.S. shale sector, leading to forecasted surpluses of 1 million barrels per day in 2025 and 1.5 million barrels per day in 2026.


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