By Nia Williams
(Reuters) – Oil turned positive on Monday, recovering after falling to close to the lowest this year, as rumours of an OPEC+ production cut offset concerns about street protests against strict COVID-19 curbs in China, the world’s biggest crude importer.
U.S. West Texas Intermediate (WTI) crude rose 48 cents, or 0.1%, to $76.76 at 11.57 a.m. ET (1647 GMT), after touching its lowest since Dec. 22 at $73.60.
Brent crude rose 14 cents, or 0.2%, to trade at $83.77 a barrel having slumped more than 3% to $80.61 earlier in the session for its lowest since Jan. 4.
Both benchmarks, which hit 10-month lows last week, have posted three consecutive weekly declines.
Crude crash Crude crash https://graphics.reuters.com/GLOBAL-OIL/myvmonqjqvr/chart.png
“The word on the street is there’s rumour that OPEC+ is already starting to float the idea of a production cut on Sunday,” said Matt Smith, lead oil analyst at Kpler. “That’s helped reverse losses that were caused overnight by Chinese protests.”
The Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, will meet on Dec. 4. In October, OPEC+ agreed to reduce its output target by 2 million barrels per day through 2023.
Rumours of a cut outweighed an earlier sell-off on the news hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over COVID restrictions flared for a third day and spread to several cities.
China has stuck with President Xi Jinping’s zero-COVID policy even as much of the world has lifted most restrictions.
“We feel some of the selling based on reports of China uprisings was overdone,” said Phil Flynn, an analyst at Price Futures Group. “Inventories are still near record lows and this probably increases the odds of an OPEC production cut.”
Meanwhile, Group of Seven (G7) and European Union diplomats have been discussing a price cap on Russian oil of between $65 and $70 a barrel, with the aim of limiting revenue to fund Moscow’s military offensive in Ukraine without disrupting global oil markets.
However, EU governments were split on the level at which to cap Russian oil prices, with the impact being potentially muted.
The price cap is due to come into effect on Dec. 5 when an EU ban on Russian crude also takes effect.
(Reporting by Nia Williams; Additional reporting by Noah Browning in London, Yuka Obayashi in Tokyo and Mohi Narayan in New Delhi; Editing by Marguerita Choy and Chris Reese)