Volatility in the oil market has persisted as the uncertainty over the global economic slowdown continues to weigh on the demand outlook.
On Monday, Crude oil prices recovered from several days of decline after the market readjusted to OPEC+’s output cut.
Brent crude increased by 1.36% to trade at $92.88 per barrel, while the West Texas Intermediate went up by 1.38% to trade at $86.79 per barrel, according to Oilprice.com.
In the meantime, oil traders are observing China’s buying activity for clues about demand in the world’s largest crude importer and how that may affect prices.
Low growth in the Chinese economy has added to the series of bearish factors affecting the global oil market.
Analysts have also suggested that the focus has shifted to the demand side after the recent meeting by OPEC+. The market is now waiting for the next major outcome to provide some direction.
What you should know
- Recall that earlier in the month, OPEC+ announced that it had set the nominal size of its production cut at 2 million barrels per day, although the Saudi Arabia Energy Minister, Abdulaziz Bin Salman, said that the actual output cuts agreed upon were between 1 million barrels per day to 1.1 million barrels per day.
- The output cut is coming on the heels of the uncertainty that surrounds the global economy and oil market outlooks and the need to enhance the long-term guidance for the oil market.
- The International Energy Agency last week warned that the output curbs could fuel global economic recession.
- The United States Government has been highly critical of the decision of OPEC+ on production cut, describing the decision as a total disaster and warning that it could be taken as a “hostile act.
