It is observed that the supply squeeze due to the concerns of the slowdown in economic activity in the oil markets creates a balance in the pricing.
Despite the short-term supply squeeze, oil is seeking balance with the signals of recession in the economy.
US crude is trading sideways at $85 and Brent at $93.
The Organization of the Petroleum Exporting Countries and its allies have agreed to curb supplies from November ahead of next month’s European Union sanctions on Russian oil.
Crude has fluctuated in recent sessions amid broader market trends and changes in the dollar. The relative weakness in the dollar on the second trading day of the week has made the commodities cheaper for global buyers.
Oil prices are on track to post their first monthly gain since May, albeit dampened by developments following Moscow’s invasion of Ukraine. Investors are discussing concerns about the reduction in supply driven by the global economic slowdown and tighter monetary policy. They are also awaiting more details on a US-led plan to limit the price of Russian oil.
The relatively solid market signals come despite the weak economic outlook for China, the largest importer of crude oil, which has contributed to the headwinds. The country’s third-quarter GDP showed a mixed recovery, with tight COVID-19 controls and a real estate crisis continuing to pressure growth and, therefore, oil demand.
