Oil Rangebound As China Trade Deal, OPEC Output Clash For Attention

Meanwhile, no major market shakeups are predicted for the near-term: File Image/Pixabay

Oil trading on Monday was influenced by two contrasting forces: concern that the Organization of the Petroleum Exporting Countries (OPEC) would increase output again; and optimism stemming from the possibility of a productive U.S./China trade deal.

As such, oil remained range bound: as of 1538 GMT, Brent was down 26 cents at $65.68 per barrel, West Texas Intermediate declined at $61.41.

Four sources with knowledge of the matter told media that eight OPEC members will consider enacting a modest increase in December output when they meet this coming Sunday.

Meanwhile, U.S. treasury secretary Scott Bessent said a "substantial framework" for a trade deal had been worked out between Washington and Beijing that could see deferrals of 100 percent U.S. tariffs as well as China's rare earth export restrictions.

But clouding everything was the ongoing perception of weakening demand, and on that score Chris Beauchamp, chief market analyst at IG Bank, said, "The hope for bulls is that U.S. consumption continues to recover, otherwise it seems the drift lower seen so far today is likely to intensify."

As for the latest round of sanctions imposed by the U.S. against Russia, which helped oil rebound from a five-month low last week, Daniel Ghali, a commodity strategist at TD Securities, said, "We ultimately expect minimal disruptions from the recent wave of sanctions, but in the imminent-term quant fund shorts will drive price action over the coming sessions."

For his part, Fatih Birol, executive director of the International Energy Agency, told Bloomberg Television on Monday that he doesn't expect a major shake-up on the market in the near term, and that growing U.S. production will moderate oil prices in the coming days and weeks.

Dave Ernsberger, president of S&P Global Commodities Insights, agreed, saying the oil market was dealing with a "pretty significant" overhang issue.