Crude oil closed little changed Monday after surging more than 5% in reaction to a Wall Street Journal report that OPEC+ is considering a production hike of as much as 500K bbl/day for the cartel's meeting next month.
Saudi Arabia denied the report, adding the "current cut of 2M bbl/day by OPEC+ continues until the end of 2023," and the United Arab Emirates also said it has not discussed changing the previous agreement.
Meanwhile, U.S. natural gas futures closed +7.5% to a two-week high $6.776/MMBtu (NG1:COM) on forecasts for colder weather and stronger heating demand this week than previously expected, and the possibility of a rail strike that could disrupt coal deliveries and force power plants to burn more gas.
Goldman Sachs cut its Q4 oil price outlook by $10 to $100/bbl to reflect reduced expectations for China's demand due to rising COVID-19 cases and the "lack of clarity" on the implementation of the G-7's oil price cap, which takes effect December 5.
"The market is right to be anxious about forward fundamentals" Goldman economists said, adding that more lockdowns in China would be the equivalent to OPEC's 2M bbl/day production cut.
The combination of China's COVID problem and aggressive tightening by central banks in the U.S. and elsewhere have shifted market sentiment, sending U.S. crude oil futures falling 10% last week.