Oil wiped out an earlier decline as a slump in the dollar offset mounting concerns that global demand is weakening.

The global Brent benchmark rose to trade near $94 a barrel, after earlier shedding as much as 1.8% in London. Risk sentiment generally firmed across markets on Monday with equity markets climbing in Europe and the dollar weakening sharply as traders bet inflation is near a peak.

However, there are concerns the outlook for consumption is worsening as global growth slows and China maintains its strategy of controlling Covid-19 by curbing activity. An outbreak at one of China’s top media schools in Beijing should be stamped out “in the shortest period of time,” local government officials said Sunday.

Crude has sunk by almost a third since June, shedding all the gains since Russia’s invasion of Ukraine. The reversal has come as central banks including the Federal Reserve tighten policy to quell inflation. Still, back-to-back declines in the dollar have helped oil recover from its lows in recent days, while a spate of Chinese crude purchases has spurred some optimism that the real-world market for barrels may have bottomed. 

“The oil price recovers further today, aided by a drop in the US dollar,” said Jens Pedersen, a senior analyst at Danske Bank. Traders are also looking for “further hints on OPEC’s stance on the oil market,” he added.

Chinese authorities have intensified lockdowns and restrictions lately as a key Communist Party meeting looms. Reflecting the challenges, UBS Group AG trimmed its December Brent crude forecast by $15 a barrel.

Join us at 10 a.m. New York time for a discussion on the energy MLIV Pulse survey results with CIBC Private Wealth’s Rebecca Babin and DWS Group’s Darwei Kung.

In the US late Friday, the Treasury issued rough compliance guidelines for the proposed cap on Russian oil, focusing on the documentation needed by the private sector to adhere to the program, which is meant to kick in from December as Europe tightens sanctions on flows. Deputy Treasury Secretary Wally Adeyemo said that Moscow would have no choice but to participate.

Iranian nuclear talks were also in focus as the UK, France and Germany said at the weekend that they have “serious doubts” about Tehran’s commitment to a new agreement. Should a pact be agreed it could pave the way for greatly increased flows of Iranian crude to the global market.