Oil steadies as traders fret global slowdown will erode demand

Oil steadied amid concern a global slowdown will hurt demand in Europe and the US while China’s consumption is damped by its Covid Zero strategy.

West Texas Intermediate traded below $87 a barrel, after losing a gain that followed a decision on Monday by the Organization of Petroleum Exporting Countries and its allies to pare output. Reflecting the softness, Saudi Arabia cut prices for customers in Asia and Europe for next month’s shipments.

An additional headwind for commodities including crude came from the dollar’s surge to an all-time high this week, according to a Bloomberg gauge. The currency’s ascent makes oil more expensive for buyers outside the US.

Oil has made a weak start to September, extending a run of three monthly losses that was the worst streak in more than two years. With central banks jacking up rates to quell inflation, investors are concerned economies may be tipped into recession. OPEC+ leader Saudi Arabia said this week it’s ready to manage the market proactively, raising the possibility of more supply cuts.