The oil complex held onto early gains to settle higher Monday as the market weighed the impact of a possible OPEC-led production cut on global supply.
ICE January Brent settled up $1.68/b at $60.48/b and NYMEX January WTI was up $1.21/b at $51.63/b at market close.
Speculation that OPEC may announce production cuts to stem the massive selloff of late allowed markets to claw back some of the steep declines booked during Friday's session, when WTI fell $4.21/b and Brent slid $3.80/b.
In particular, traders are eyeing the G20 summit, scheduled to take place at the end of the week in Buenos Aires. Saudi, Russian and US leaders all are likely to attend. Analysts Monday said a cut was expected, but talk ranged from 500,000 b/d on the low side to 1.4 million b/d on the high side.
Despite expectations of a bearish production cut, implied volatility for at-the-money January WTI puts was holding above 60% in afternoon trading, according to CQG. Elevated implied volatility suggested that significant price risk remains in the market, especially to the downside.
Likewise, trading volumes for $50 WTI puts spiked to 6,480 contracts late on Monday afternoon.
Products futures, further buoyed by rising equity markets, traced the oil complex higher Monday.NYMEX December RBOB settled 5.13 cents higher at $1.4426/gal and NYMEX December ULSD was up 1.68 cents at $1.8930/gal at market close.
