West Texas Intermediate rose 3.7% to settle above $93 a barrel on Tuesday after getting an extra boost as the dollar weakened, making commodities priced in the currency more attractive. Brent settled above $100 for the first time since the beginning of August. Traders are weighing the potential of OPEC+ decreasing its crude output after Saudi Oil Minister Prince Abdulaziz bin Salman told Bloomberg futures prices are increasingly disconnected from fundamentals. Looking ahead, a US oil crude inventory report will be released Wednesday morning, offering markets a glimpse into the country’s current demand for oil.

“Oil continues to march higher today as the market digests comments regarding potential cuts from OPEC+,” said Stacey Morris, head of energy research at VettaFi. “Market observers will also be closely watching US inventory reports to see if the recent strength in gasoline demand has held up.” Adding further support to prices, Kazakh oil exports may be disrupted for months due to damaged moorings. Shippers are being asked to postpone some tanker loadings at the main export terminal for CPC Blend crude so that dive teams can assess the damage.

Oil has undergone a tumultuous period of trading since Russia’s invasion of Ukraine in late February upended flows. OPEC+ has reversed all of the output cuts made during the pandemic, but Prince Abdulaziz suggested the cartel may need to tighten production again when it meets next month.

Futures have lost about a quarter of their value since early June as escalating fears of an economic slowdown threaten the demand outlook. The potential revival of a nuclear deal with Iran, which could lead to a jump in crude exports from the OPEC producer, also added to the bearish sentiment. Yet market activity has dwindled, with open interest falling to the lowest since early 2015. Oil’s steady slide has also filtered through to the pump. In the US, gasoline prices are on their longest run of declines since 2015, potentially easing some of the inflationary pressures on the country’s economy. US diesel prices have fallen for more than 60 days, though that may reserve as demand for the fuel rises in the approach to winter. In Europe, figures released Tuesday showed economic activity shrinking for a second month.

Technical pressure is building in the products market gasoline futures approach their 200 day moving average. If prices for the September contract fall below the technical support level, it could trigger even more selling.

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West Texas Intermediate pared more than $4 of losses intraday to settle above $90 a barrel, still finishing cents below the previous session. The Saudi oil chief warned that “extreme” volatility and lack of liquidity in the futures market are moving prices in ways that don’t conform to fundamental supply-and-demand factors. The divergence may prompt the OPEC+ alliance to act, Bloomberg News reported. So far this month, prices have swung within a range of about $13.

Prince Abdulaziz represents the largest oil producer in OPEC+ and is arguably the most important player in the 23-nation alliance. He said futures prices don’t reflect the underlying fundamentals of supply and demand, which may require the group to tighten production when it meets next month to consider output targets. “The Saudis just reminded oil markets that they still run the show,” said Ed Moya, senior market analyst at Oanda. “OPEC+ is not happy with how oil market fundamentals are nowhere being reflected with current prices. It seems energy traders should prepare for enhanced volatility going forward and that the Saudis may look to do whatever it takes to keep prices supported here.”

Prices fell earlier in the session after US President Joe Biden spoke with leaders from France, Germany and the UK about reviving a nuclear deal with Iran, a step that probably would allow more crude shipments by the OPEC nation.

After surging in the first five months of the year, crude’s rally has been thrown into reverse, with losses deepening in the summer trading months. The selloff, which has been intensified by below-average trading volumes, may alleviate some of the inflationary pressures coursing through the global economy that have spurred central banks, including the US Federal Reserve, to hike rates.

Additionally, China was said to be planning a series of special loans to ramp up support for its beleaguered property market, the latest sign of the world’s largest crude importer moving to shore up its economy. The apparent need for such stimulus has exacerbated fears of a global slowdown.

Rising flows of long-haul cargoes into Asia from regions such as the US, which take twice as long as Middle Eastern barrels to reach buyers, have forced spot premiums of Persian Gulf barrels to dip in this month’s trading cycle. Meanwhile options markets have been pricing growing premiums for bearish put contracts that would profit a buyer if prices fall.

Oil settled below $90 a barrel as softer economic data from China and a potential breakthrough in negotiations with Iran eased pressure on crude markets.

West Texas Intermediate closed nearly 3% lower after sinking earlier to a six month low. Oil started the week on a bearish note after China announced a surprise cut in key interest rates in response to weak economic data. Meanwhile, Iran signaled a nuclear deal agreement could be reached in the next few days, raising the prospect of Iranian crude returning to the global market. “Most are increasing the probability of an Iranian deal,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Management. “I see $80 as significant support and would expect buyers start to get interested at those prices,” she added.

Foreign Minister Hossein Amirabdollahian said in a briefing that the country would inform the European Union Monday evening of its position regarding a final draft text for a finalized nuclear deal, striking a more conciliatory tone than in recent months. A spokesperson for the Iranian foreign ministry said there could be a basis for a signed agreement “in the very near future.”

We’re really seeing where China’s economy is at and it’s a lot less rosy than people had hoped, consumption is going to be lower than anticipated, certainly for oil,” Sucden Financial’s head of research Geordie Wilkes said by phone. China’s economic recovery unexpectedly weakened in July as fresh Covid-19 outbreaks impacted consumer and business spending. Industrial output rose 3.8% from a year ago, lower than June’s 3.9% and missing economists’ forecast of a 4.3% increase. Oil refinning also fell as plants shut for maintenance.

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West Texas Intermediate futures ended the week 3.5% higher after losing 2.4% Friday. Iran said it could accept a European Union-brokered nuclear deal if it receives certain guarantees. The prospect of more oil supply wiped out all gains earlier in the session. Crude has been whipsawed by a flurry of both bearish and bullish headlines in recent days. Yet cooling inflation that may ease the pace of interest-rate hikes by the Federal Reserve has supported commodities broadly. “My view is we move higher,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Management. “Demand numbers in the US were better and we have priced in a lot of negative demand adjustments into the market at this point,” she added.

The International Energy Agency this week raised its forecast for global demand growth, which has supported prices. On the other hand, the Organization of Petroleum Exporting Countries expects the global market to tip into a surplus this quarter, and trimmed forecasts for the amount of crude it will need to pump.

And while many analysts and traders believe the prospect of an Iran nuclear deal has not been priced into the market yet, the likelihood of an agreement is increasing. Both sides, the US and Iran, have made enough incremental progress for a shift in the base case expectations for the timing of a deal from the first quarter of 2023 to the fourth quarter of 2022, Rapidan Energy Group said in a note.  “The oil balance will be close to impossible to reliably predict,” given the array of wildcards in the market at the moment, said Tamas Varga, an analyst at PVM Oil Associates Ltd.

Though prices have rallied this week, options markets are telling a different story. Traders are paying the biggest premium for bearish put options over bullish calls since February. That gauge — known as the put skew — has grown steadily since concerns about the strength of the global economy have intensified.

West Texas Intermediate futures settled 2.6% higher to trade above $94 a barrel while Brent again neared $100. The IEA lifted its consumption estimate by 380,000 barrels a day, saying soaring natural gas prices and heat waves are prompting manufacturers and power generators to switch their fuel to oil.

Buffeted by bullish and bearish headlines, crude has been largely rangebound near a six-month low. A brief halt of Russian flows to some parts of Europe and weaker-than-expected US inflation data pushed prices higher. The subsequent resumption of Russian supply — as well as renewed attempts to resurrect the Iranian nuclear deal — have since weighed on the market.

“It looks like demand worries might be a bit overdone, and extremely high gas prices will support oil demand during winter with gas-to-oil switching,” said Helge Andre Martinsen, a senior oil analyst at DNB Bank ASA.

In the US, average retail pump prices dropped below $4 a gallon after peaking at a record above $5 in mid-June, according to data from auto club AAA. The decline may be brief. Retail gasoline may surge back above $5 and Brent oil futures could go as high as $130, Damien Courvalin, Goldman’s head of energy research, said in a Bloomberg Television interview.

Still, there are signs of weakness in the futures market. It’s most evident in a narrowing of closely watched time differentials. WTI’s prompt spread — the gap between its two nearest contracts — has shrunk to about 87 cents a barrel in backwardation, down from $2.88 a month ago. The comparable measure for global benchmark Brent was $1.34, down by about two-thirds during the same period.

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