(Reuters) – Global oil standards retreated from their lowest levels in nearly a year on Monday, with US crude ending positive, boosted by talk of OPEC+ production cuts that offset concerns about tough COVID-19 restrictions in China, the world’s largest. largest importer of crude.
Price action has been volatile. US West Texas Intermediate crude closed up 96 cents, or 1.3 percent, at $77.24, after earlier touching its lowest since December 2021 at $73.60.
Brent crude also turned positive briefly, but closed down 44 cents, or 0.5%, when trading at $83.19 a barrel, after falling more than 3% to $80.61 earlier in the session, its lowest since January 4, 2022.
Both benchmarks posted three consecutive weekly declines.
“The word on the street is that there are rumors that OPEC+ has already begun to float the idea of cutting production on Sunday,” said Matt Smith, senior oil analyst at Kpler. “It helped reverse the toll of the Chinese protests overnight.”
Analysts at Eurasia Group noted in a note on Monday that weak demand from China could prompt the Organization of the Petroleum Exporting Countries and allies including Russia to cut production after supply cuts in October.
“The decision will depend on the course of the oil price when OPEC + meets and the extent of the apparent turmoil in the markets due to EU sanctions,” the group wrote in its note.
OPEC+ will meet on December 4. In October, OPEC+ agreed to cut production target by 2 million barrels per day until 2023.
Rumors of a possible cut overshadowed an earlier sell-off built on China’s poor outlook, as hundreds of protesters and police clashed on Sunday over tough restrictions on the spread of the coronavirus, which limited the freedom of millions of residents.
China has stuck to President Xi Jinping’s COVID-free policy even as much of the world has lifted most restrictions.
Robert Yoger, director of energy futures at Mizuho in New York, said speculative buyers also helped reverse early losses.
“Pretty much every time we move by multiple percentage points, you’ll see the specs come in in the afternoon and buy the pullback,” he said.
Diplomats from the Group of Seven (G7) industrialized nations and the European Union have discussed a cap on Russia’s oil price of between $65 and $70 a barrel, aimed at limiting revenues to fund Moscow’s military offensive in Ukraine without disrupting global oil markets, and they will meet again. on Monday.
However, EU governments have been divided over the level at which to cap Russian oil prices, with the effect likely to be muted.
The price cap is due to come into effect on December 5, when the European Union’s ban on Russian crude takes effect.
(Reporting by Nia Williams) Additional reporting by Noah Browning in London, Yuka Obayashi in Tokyo, and Mohi Narayan in New Delhi; Editing by Margarita Choi, Chris Reese, and Cynthia Osterman
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