(Bloomberg) — Oil fluctuated between small gains and losses as traders weigh a planned production increase from OPEC+ next month, economic headwinds in China and lower output in Libya.
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West Texas Intermediate steadied above $73 a barrel amidst lower trading volumes on Monday due to the US holiday. Global benchmark Brent hovered around $77 a barrel after losing more than 2% on Friday.
Traders are assessing news that the Organization of Petroleum Exporting Countries and its allies are due to add 180,000 barrels a day as they gradually restore production that’s been halted since 2022, according to delegates involved in the discussions.
Adding to bearish headwinds for the commodity are signs of economic slowdown in the world’s top crude importer. Chinese data showed factory activity contracted for a fourth month in August and a residential slump deepened, raising concerns country may struggle to meet this year’s economic growth target
Meanwhile, options are signaling the market is now anticipating a lower risk of futures spiking. The bias toward puts in WTI’s second-month options skew has deepened to the most bearish since late July, as traders continue to protect against price drops.
Oil has given up most of its gains this year as expectations of ample supply and signs of economic headwinds, including in the US, weighed on prices. Volatility has ramped up in recent weeks, with crude futures facing some of their largest intraday swings in months.
OPEC+ has repeatedly said it could “pause or reverse” its planned output hikes if necessary, though a political crisis in Libya that halved the nation’s production may have given the alliance the space to add more barrels.
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–With assistance from Yongchang Chin.
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