OPEC pledges to increase production to 100% of targeted cuts

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Today's pledge to meet 100% compliance is an attempt by OPEC to address concerns of an undersupply scenario in which oil price increases to levels that would hinder global growth. And after OPEC's deal on Friday, Trump tweeted: "Hope OPEC will increase output substantially".

"The spread between WTI and Brent is shrinking as Opec's output increase is having a bigger impact on Brent than WTI", said Hong Sungki, a Seoul-based commodities trader at NH Investment & Securities Co.

Largely because of unplanned disruptions in places like Venezuela and Angola, the group's output has been below the targeted cuts, which it now says will be reversed by supply increases, especially from OPEC leader Saudi Arabia.

The Secretary General of the Organisation of Petroleum Exporting Countries (OPEC), Mr. Muhammad Barkindo, has dismissed suggestions that pressure by the United States President, Mr. Donald Trump, played a role in OPEC's decision to increase oil production.

Brent crude futures were down 78 cents at $74.78 a barrel at 0917 GMT, while USA light crude was up 25 cents at $68.83 a barrel, supported in part by a Canadian supply outage. ICE August Brent lagged slightly, settling $2.50 higher at $75.55/b.

In contrast, U.S. West Texas Intermediate crude was up 29 cents at US$68.87 a barrel on Monday. Total volume traded was more than double the 100-day average.

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The differing reaction narrowed Brent's premium to less than $6 a barrel from more than $10 last week.

OPEC and its allies have since previous year been participating in a pact to cut output by 1.8 million barrels per day.

The Opec deal, which was reached after a last-minute compromise with Iran, is a victory for Saudi Arabia and Russian Federation that initially proposed an increase. "If we are going to see more Iranian barrels coming off the market, that is likely to be bullish for USA exports". That's a signal that exports from the Islamic Republic may fall much further, more quickly than expected.

The outcome of the OPEC meeting was an additional 1 million barrels per day on top of 32-33 million barrels per day of its current production, a decision that was attributed to consumers from the U.S. to India and China expressing anxiety over rising prices.

Maintain overweight: In last week's Vienna meeting, Opec and non-Opec allies chose to raise production output, effective July 2018.

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