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Oil clawed back some losses after a weekly slump as fears over an economic slowdown continue to weigh on the outlook for demand.
West Texas Intermediate futures traded above US$86 a barrel after sliding almost 4 percent on Friday. In a speech Sunday opening the 20th Communist Party congress, Chinese President Xi Jinping signaled no change in direction for China’s strict Covid Zero policy, a strategy that has dragged on its economy this year.
“The upward momentum may not last as there’s no clear reason for a rally,” said Vandana Hari, the founder of Vanda Insights. “It could be some bargain hunting after a rapid slump toward the end of Friday’s session.”
An economic slowdown in China has added to a raft of bearish factors for oil, including aggressive monetary policy by central banks to try and tame inflation and a stronger US dollar. That overshadowed oil production cuts from the OPEC+ alliance that take effect from November.
The International Energy Agency last week warned that the output curbs could tip the global economy into recession, while the US criticised the cuts.
White House National Security Adviser Jake Sullivan said options for re-evaluating US-Saudi relations include “changes to our approach to security assistance.” He spoke Sunday on CNN’s “State of the Union.”
The Biden administration had previously sought more oil from producers as it battles energy-driven inflation. — Bloomberg
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