LONDON (Reuters) - Oil prices steadied on Monday, recovering from earlier losses, as investors weighed potentially tight supply against economic storm clouds that could foreshadow a global recession and erosion of fuel demand.
Brent crude futures for December settlement fell by as much as 1.1% but recovered to being down 17 cents, or 0.2%, at $97.75 a barrel by 1353 GMT.
West Texas Intermediate crude for November delivery declined by as much as 1.1% but was last at $92.62, down 2 cents.
The Organization of the Petroleum Exporting Countries and allies including Russia, together known as OPEC+, decided last week to lower their output target by 2 million barrels per day.
Brent and WTI posted their biggest weekly percentage gains since March after the reduction was announced.
The OPEC+ cuts will squeeze supply in an already tight market. EU sanctions on Russian crude and oil products will take effect in December and February respectively.
Concerns over still relatively robust demand as the pandemic has eased meeting potentially scarce supply have been deepened as the European Union late last week endorsed a G7 plan to impose a price cap on Russian oil exports.
The complicated new sanctions package could end up shutting in considerable supplies of Russia crude, analysts have warned.
“A recessionary economic outlook will lead to lower oil demand,” Fitch Ratings said on Monday. “However, we expect pricing volatility to remain high in the short term as geopolitical factors, such as further sanctions leading to a reduction in Russian exports ... could significantly shift supply patterns and cause large fluctuations in prices.”
Meanwhile, services activity in China during September contracted for the first time in four months as COVID-19 restrictions hit demand and business confidence, data showed on Saturday.
The slowdown in China, the world’s second-largest oil consumer behind the United States, adds to growing concerns over a possible global recession triggered by numerous central banks raising interest rates to combat high inflation.