Oil prices climbed modestly in early trade on Monday after sliding to eight-month lows last week weighed down by a surging U.S. dollar and fears sharp interest rate hikes globally would spark a recession and hit fuel demand.
The dollar index climbed to a fresh 20-year high on Monday, capping oil price gains.
Brent crude futures were up 17 cents, or 0.2 per cent at $86.32 a barrel while the U.S. West Texas Intermediate, WTI, crude futures were up 21 cents, or 0.3 per cent, at $78.95 a barrel. Both contracts slumped around 5 per cent on Friday.
Analysts said crude should find some support as Russia reinforces troops for the war on Ukraine and European Union sanctions on Russian oil are set to take effect in December.
“This is really the big question mark for oil in forecasting the next few quarters how do weaker demand projections weigh up against EU sanctions,” said Commonwealth Bank analyst Vivek Dhar who had expected Brent to head back toward $100 a barrel in the fourth quarter.
“It’s still going to be challenging for the market to find that oil to replace Russian supply,” Dhar said.
With prices plunging, attention will turn to what the Organization of the Petroleum Exporting Countries and allies led by Russia, together called OPEC+, may do when they meet on October 5, after agreeing to cut output modestly at their last meeting.
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