Oil Falls as Souring Economic Sentiment Filters Through Markets

West Texas Intermediate slipped toward $83 a barrel on Monday as investors also digested a raft of delayed Chinese economic data that showed a mixed recovery during the third quarter.

A stronger dollar added to headwinds, making commodities priced in the currency less attractive, while European economic figures pointed to contraction, boosting the likelihood of recession in the region.

Crude has lost a third of its value since June as fears over a global economic slowdown continue to hang over the market. However, significant OPEC+ output cuts and looming European Union sanctions on Russian oil flows have raised concerns about the supply outlook heading into winter. For now though, traders remained glued to the outlook for economic growth and further central bank rate hikes.

“With important central bank meetings ahead, the oil market will likely trade on risk sentiment and the US dollar this week,” said Jens Pedersen, a senior analyst at Danske Bank.

The decision by the Organization of Petroleum Exporting Countries and its allies to curb supply from November has drawn a sharp rebuke from the US, which previously called on producers for more oil to help curb inflation. President Joe Biden’s top energy adviser said Sunday the cut was largely a political move.

Brent remains steeply backwardated, a bullish structure where near-dated contracts are more expensive than later-dated ones. The prompt time spread was $2.21 in backwardation, compared with $1.44 a week earlier.

China ramped up its oil imports and processing last month as refineries returned from seasonal maintenance, while exports of fuel products jumped after the allocation of new quota. Inbound shipments rose to the highest since May, according to Bloomberg calculations based on government data.