DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Monday's session flat to higher, with the December West Texas Intermediate contract retreating from an $85.41-per barrel (bbl) fresh seven-year spot high. The moves came amid a one-two punch of a stronger U.S. dollar index and lingering concerns over slowing economic growth in Asia and the European Union where the latest uptick in COVID-19 infections once again stoked fears over an impending winter wave of new cases.

NYMEX WTI futures for December delivery finished the session unchanged at $83.58 per bbl, and the international crude benchmark Brent contract edged higher to settle a penny below $86 per bbl. NYMEX December RBOB rallied 3.41 cents or 1.2% for a $2.5162-per-gallon settlement, and front-month ULSD futures advanced 2.58 cents to $2.5647 gallon.

U.S. dollar index added to gains Monday, rallying 0.2% against a basket of foreign currencies to settle at 93.809, while pressuring the front-month WTI contract. Market participants continue to assess prospects of slowing economic growth domestically against looming tapering of the Federal Reserve's $120 billion a month in asset purchases. The Federal Open Market Committee will likely announce the beginning of withdrawing the pandemic-era emergency stimulus at its Nov. 2-3 meeting.

Monday's cautious session comes amid heightened concerns over new COVID outbreaks in China and parts of the EU, where health authorities are once again introducing restrictions on mobility and in some cases resorted to all-out lockdowns. In China -- the world's second-largest economy, infections have been reported in nearly a third of the country's provinces and regions, with all medium- and high-risk regions concentrated in Inner Mongolia, Guizhou, and the capital-city of Beijing.

"Since Oct. 17, there have been multiple scattered local outbreaks in China, and they're expanding rapidly," Mi Feng, a spokesman at the China's National Health Commission, said at a news conference Sunday. "There is an increasing risk that the outbreak will spread even further."

In Russia -- a critical gas and oil producer for Europe, COVID-19 infections have hit a new record 37,678 new cases on Sunday almost 18 months after the first cases were detected in Moscow. Russian President Vladimir Putin last week announced a nationwide shutdown for the first week of November, and the capital Moscow will reimpose a partial lockdown from Oct. 28, with only essential shops such as pharmacies and supermarkets allowed to remain open.

The worrisome trend in the COVID-19 pandemic comes ahead of next week's meeting among Organization of the Petroleum Exporting Countries and allied partners where the 23-nation group is set to decide on its production policy for December. OPEC+'s current agreement calls for the alliance to jointly raise output 400,000 bpd next month after adding similar volume into the global oil market in October and November.

Over the weekend, Saudi oil minister Prince Abdul-Aziz bin Salman indicated the alliance should stick to its policy of measured production increases, adding that global demand recovery is far from complete.

"We are not out of the woods. We need a careful approach. This crisis is contained but not necessarily over," said Prince Abdul-Aziz.

His comments follow similar calls for a cautious approach from oil ministers in Russia, Nigeria, and Kazakhstan, who have indicated in recent weeks that global shortages of natural gas and coal is the result of policy miscalculations and not responsibility of the cartel to remedy.

Liubov Georges can be reached at liubov.georges@dtn.com