Oil edges higher after weekly loss as slowdown hangs over market

Oil clawed back some losses after a weekly slump as fears over an economic slowdown continue to weigh on the outlook for demand.

West Texas Intermediate futures traded near $86 a barrel after sliding almost 4 per cent on Friday. In a speech Sunday opening the 20th Communist Party congress, Chinese President Xi Jinping signaled no change in direction for China’s strict Covid Zero policy, a strategy that has dragged on its economy this year.

An economic slowdown in China has added to a raft of bearish factors that have weighed on oil, including aggressive monetary policy by central banks to try and tame inflation and a stronger US dollar. That’s overshadowed oil output cuts from the OPEC+ alliance that take effect from November.

Federal Reserve Bank of St. Louis President James Bullard left open the possibility that the central bank may raise interest rates by 75 basis points at each of its next two meetings in November and December. That’s after it hiked rates by the same amount for the third straight meeting last month.