Oil fluctuated near $107 a barrel in New York as investors monitored developments from the gathering of Group of Seven leaders, while fears of a demand-sapping recession continued to hang over the market.
West Texas Intermediate swung between gains and losses on Monday, after posting its first back-to-back weekly loss since April. The G-7 will commit to providing indefinite support to Ukraine for its defense against Russia, a draft statement showed. The group is also weighing a price cap on Russian crude.
Oil is heading for its first monthly decline since November amid mounting economic concerns as central banks hike interest rates to combat surging inflation. Retail prices for products such as gasoline haven’t fallen anywhere near as fast as crude due to a shortage of capacity to make fuels.
“Oil has recovered from last week’s correction, driven by clear signs that the product market remains tight with refinery margins going up as crude went down,” said Ole Hansen, head of commodity strategy at Saxo Bank. “Worries about recession have reduced but not removed the risk of further upside.”
G-7 leaders and officials have been discussing a potential price cap on Russian oil, but an agreement has yet to be reached, according to people with knowledge of the matter. The proposed mechanism would work by imposing restrictions on insurance and shipping, they said.
Traders have also been watching for any resumption of talks between Tehran and world powers over the revival of the Iranian nuclear deal, which would see crude from the country flow back onto global markets.
The US and Iran will restart talks in the “coming days,” the European Union’s chief diplomat Josep Borrell said on Saturday. Discussions will be indirect, with the EU acting as a mediator, and take place in a Persian Gulf nation, Iranian media quoted Borrell as saying later the same day.
Last week, the US Energy Information Administration delayed its weekly snapshot of nationwide stockpiles and demand following a power disruption. The agency expects to provide an update on the situation later on Monday.