Brent ended down 0.52% at $83.19 and WTI ended down 1.25% at $77.24.
Oil prices rallied late in the session on Monday after hitting lows in nearly a year, buoyed by rumors of a possible further production cut by the Organization of the Petroleum Exporting Countries (OPEC). and its allies in the OPEC+ agreement.
The price of a barrel of Brent North Sea oil for January delivery fell just 0.52%, closing at $83.19 after dropping as high as 3.61% earlier.
As for the barrel of American West Texas Intermediate (WTI), also with maturity in January, it gained 1.25%, to 77.24 dollars.
The session had started badly for the two stars of the black gold market, the WTI falling to its lowest level of the year, at 73.60 dollars, a first since the end of December 2021.
The Brent had retreated to a more explored depth since the beginning of January.
For Chris Low, of FHN Financial, this initial inflection was, “in part, a reaction to the protests in China”, which adds an additional layer of uncertainty about the economic trajectory of a country already heavily penalized by its zero- Covid.
If road traffic remains strong in China, according to Claudio Galimberti, of Rystad Energy, a sign that activity has not slowed down dramatically, the demonstrations “against confinements in several regions of the country are a novelty and could be a source further disruption in the coming days.”
But the market trend reversed during the session, with the emergence of rumors of a possible further reduction in production by the OPEC+ group at its meeting on December 4.
For the firm Eurasia Group, if the price of Brent falls below 80 dollars for an extended period between now and the cartel rally, “the main officials of OPEC + could plead for a new cut in production to stop the fall”.
“With interest rate hikes across the West and the likely lack of sustained growth in early 2023, there is a risk that demand will be weaker than expected, which means OPEC may have to adjust” , abounded Bart Melek, of TD Securites.
At the beginning of October, the OPEC+ group had already decided to contract its volumes by two million barrels per day, with effect in November.
Despite the economic factors that threaten the demand for black gold, “if OPEC decides to be offensive, (…) this can have a very significant effect” on prices, announces Bart Melek, for whom a reduction will not should not exceed 500,000 barrels per day.