Oil steadies after wild ride with Chinese demand, OPEC+ in focus

Oil steadied after a volatile session on Monday as investors juggled a clouded supply outlook together with concerns over weaker demand in virus-hit China.

West Texas Intermediate held near $80 a barrel in early Asian trading after swinging in a $5 arc in the week’s opening session. Prices plunged following a report that OPEC+ was considering an output hike, then recovered to end little changed after Saudi Arabia pushed back against the suggestion.

Crude-consumption trends in China remain in the spotlight as repeated Covid-19 outbreaks prompt officials to press on with lockdowns and movement curbs. That’s hurting the outlook for energy demand just weeks after investors had speculated Beijing may be moving away from its zero-tolerance stance.

Oil prices have weakened this month on concerns about demand, and as investors count down to the imposition of fresh European Union sanctions on Russian seaborne flows and a complementary Group of Seven price-cap plan. Moscow doesn’t plan to supply crude or oil products to nations that implement the limit, details of which could be announced as soon as Wednesday.

“The Saudi ministry’s strong statement denying an increase is being actively considered, and suggestions that further cuts are not entirely off the table, should give market participants pause about predicting a policy reversal,” RBC Capital Markets analysts including Christopher Louney said in a note.