Oil futures climbed in Monday dealings, after last week’s sharp decline, as investors weighed recession fears against tight crude supplies.
Price action
- West Texas Intermediate crude for November delivery CL.1, +0.61% CL00, +0.61% CLX22, +0.61% rose $1.11, or 1.3%, to $86.72 a barrel on the New York Mercantile Exchange. Prices posted a loss of 7.6% for last week.
- December Brent crude BRN00, +0.61% BRNZ22, +0.61% was up $1.30, or 1.4%, at $92.93 a barrel on ICE Futures Europe after a 6.4% weekly loss.
- Back on Nymex, November gasoline RBX22, +0.39% rose 1.2% to $2.6636 a gallon, while November heating oil HOX22, +2.36% was up 2.9% at $4.096 a gallon.
- November natural-gas futures dropped 7.5% to $5.972 per million British thermal units after loss of 4.4% last week.
Market drivers
WTI and Brent crude futures declined sharply last week, giving back a chunk of the gains scored earlier this month after the Organization of the Petroleum Exporting Countries and its allies — a group known as OPEC+ — agreed to cut production by 2 million barrels a day beginning in November.
Volatile activity in financial markets last week underlined fears of a global economic downturn that could crimp crude demand, though underlying tightness in supplies and OPEC+’s willingness to cut production despite U.S. anger were seen underpinning prices.
“With OPEC+ voting to cut output by 2 million barrels a day to support prices, despite vocal opposition from the White House, and amidst a strong inflation spike through Europe and the U.S., the friction is only set to intensify further into 2023 as fears of a recession looms large,” said Mihir Kapadia, chief executive officer of Sun Global Investments, in market commentary.
Read: Saudi Arabia defends OPEC+ production cut, suggests White House wanted delay until after midterms
Uncertainty continues around demand prospects in China as it sticks to its zero-COVID policy. China’s central bank on Monday rolled over medium-term policy loans while keeping interest rates unchanged, according to Reuters, reinforcing expectations that policy will remain loose.
China on Monday unexpectedly delayed the release of its third-quarter gross domestic product figures a day before their official release, news reports said, an unusual move as the country’s ruling Communist Party begins a key political gathering.
“Prices could continue to be volatile in the near future as general economic uncertainty and investor sentiment continue to play a key role in price action while investors await macroeconomic reports and central banker speeches during the week, along with earnings reports from major Wall Street companies,” said Walid Koudmani, chief market analyst at XTB, in a note.
WTI oil futures “are hovering in an interesting technical position as they test a short-term support area around $84.50, which managed to limit the most recent downward movement,” the analyst said. “If this area is broken, it may lead to the start of a bigger move which may result in further speculation regarding the upcoming production targets set by OPEC+.”