Crude Oil Hits 1-Week Low After OPEC+ Hikes Output Supply: How To Place Bets On WTI, MCX?

Crude Oil Price Today: Global crude oil prices fell to their lowest in a week on Monday, Aug. 4, shortly after the Organization of Petroleum Exporting Countries and its allies (OPEC+) agreed to another large output increase in September, though traders remained wary of further sanctions on Russia.

Brent crude futures last fell $1.17, or 1.7%, to $68.50 a barrel. US West Texas Intermediate crude declined $1.26, or 1.9%, to $66.07. Both oil benchmarks lost about $2 on Friday. Back home, crude oil futures last traded 2.23% lower at Rs 5,756 per barrel on the multi commodity exchange (MCX).

The OPEC+ group, agreed on Sunday to raise oil production by 547,000 barrels per day (bpd) for September. The latest in a series of accelerated output increases aimed at capturing market share. The move marks a full and early reversal of the oil producing group's largest tranche of output cuts, amounting to about 2.5 million bpd, or about 2.4% of global demand.

The latest increase may reinforce speculation that global crude supplies will run ahead of demand into the end of the year, lifting commercial stockpiles, compressing key market timespreads, and setting a sell-off.

Investors also continued to digest the impact of the latest US tariffs on exports from dozens of trading partners and remain wary of further US sanctions on Russia. US President Trump has threatened to impose 100% secondary tariffs on Russian crude buyers as he seeks to pressure Moscow into halting its war in Ukraine.

The US, last week, imposed penalties on India for continuing to purchase Russian crude, which currently accounts for approximately 45–50% of India’s total oil imports. "If Indian refiners scale back Russian purchases, an estimated 1.7 million bpd of supply could be at risk, potentially tightening global crude markets-especially if alternative sources are not readily available or economically viable," said Mohammed Imran of Sharekhan.

The US oil rig activity continues to decline, despite relatively stable prices in recent weeks. The rig count fell by 7 last week to 415, marking the lowest level since September 2021. This represents the 13th consecutive weekly decline, with rig activity down nearly 13% over the period, indicating a cautious stance from US producers amid uncertain demand and pricing outlooks. 

The crude oil macro-outlook is still unclear. Aggressive bullish bets are capped by economic headwinds, while geopolitical risks offer upside support. Unless a supply shock occurs, crude oil futures are likely to stay in a wide range with dark undertones. Nonetheless, the INR has remained comparatively steady, bolstering the current domestic crude prices.

"In addition to diversifying its crude sourcing beyond reliance on the Middle East, India is still developing strategic petroleum reserves. Although domestic demand for refining is steady, fuel consumption may temporarily decline during the monsoon season," said Tejas Shigrekar, Chief Technical Research Analyst- Commodities and Currencies at Angel One Ltd.

According to Mohammed Imran, Research Analyst, Mirae Asset Sharekhan, OPEC's move marks the completion of the 2.2 million bpd production cuts initiated in 2023. Imran expects short-term price rallies driven by geopolitical developments.

"However, the demand outlook remains weak, limiting the sustainability of any upward momentum. With OPEC+ increasing supply amid a tariff-driven economic slowdown, the medium- to long-term outlook for oil remain bearish," said Imran. For WTI, Imran eyes support at $65 and resistance at $68. For MCX Crude, the support level is Rs 5,685 and resistance is Rs 6,050.

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