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Oil switched between modest gains and losses as traders look ahead to this week’s OPEC+ meeting for signals of where the market is headed toward next.

Futures were little changed in New York after falling as much as 2.6% during a choppy trading session. The market is assessing the impact renewed coronavirus lockdowns will have on demand and the likelihood they spur OPEC+ to keep the reins on supply when the group meets to discuss output policy on Thursday.

U.S. equities fell as investors weighed to what extent a recent block trades selling spree would spread through financial markets. A strengthening U.S. dollar, which reduces the appeal of commodities priced in the currency, also weighed on crude futures.

“There’s volatility in the market coming from all over the place, and if the dollar continues to rip higher, that will not be good for crude," said Bob Yawger, head of the futures division at Mizuho Securities. Still, “there’s support from the upcoming OPEC+ meeting. The virus situation right now is so dicey, it’s unlikely they can increase barrels."

Meanwhile, navigation is set to resume in the Suez Canal after the giant container ship that’s blocked one of the world’s most important waterways for almost a week was pulled free from the bank. The Suez Canal Authority has yet to specify a timetable for when the trade route will reopen to traffic, while hundreds of vessels remain backed up at the canal.

​Oil is set to close out a fourth consecutive quarterly gain this week, aided by sustained supply curbs by the Organization of Petroleum Exporting Countries and its allies, and optimism that global demand will expand as Covid-19 vaccines. But a run of three weekly losses for WTI has put a dent in the rally, underpinning speculation that OPEC+ will continue to hold on to their output cuts.

“Recent price weakness has fueled speculation that the group of producers will again refrain from unwinding their extraordinary production curtailment this week," TD Securities commodity strategists led by Bart Melek said in a note. “OPEC is in a tight spot — a period of extreme supply management has successfully helped crude prices firm sharply, breathing life into non-conventional producers."

Traders were also tracking the introduction on Monday of a new futures contract, with Abu Dhabi kicking off its bid to establish a new benchmark. The product “provides an additional tool that the market has been looking for," Khaled Salmeen, executive director of supply and trading at Abu Dhabi National Oil Co., said in an interview with Bloomberg Television.

The blockage in the Suez Canal has caused a huge backlog of ships at both ends of the vital waterway, and spurred some vessels to avoid the congestion by taking the longer, much costlier route around Africa. Clearing the traffic jam could take one to two weeks to clear. Rates for tankers have increased, boosting the cost of shipping crude around the world.

For more articles like this, please visit us at bloomberg.com

©2021 Bloomberg L.P.

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