Oil traded below $74 as the potential boost to demand caused by the global energy crunch was weighed against the impact of the crisis on the wider economy.

       Futures in New York pared earlier gains as the dollar erased losses, making commodities priced in the currency less attractive. Thursday marks both the end of the month and the quarter -- a time when traders generally square existing positions.

       The market still is likely to be in a deficit of 1.5 million barrels a day over the next six months, according to Citigroup Inc., a figure that could grow even larger should soaring natural-gas prices spur a shift to petroleum fuels.

       A tighter market is offsetting economic concerns, stoked by a contraction in China’s factory activity in September. Crude is heading for a monthly gain, helped by supply disruptions in the Gulf of Mexico and robust demand. The global energy squeeze likely will feature in OPEC+ talks when the group meets Monday to discuss production policy, with some options traders betting prices could reach $200.

       “Until the gas, coal and power market finds a plateau or corrects lower, crude oil is likely to remain supported given the increased demand coming from substitution,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S.

       Global oil supply is expected to fall short of demand by 1.2 million barrels a day in October, and by 900,000 barrels a day the following month, according to an OPEC secretariat document being reviewed by the group’s Joint Technical Committee. If OPEC+ sticks to its agreed increase of 400,000 barrels a day in November, it’s unlikely to be enough to address growth in consumption, Vivek Dhar, an analyst at Commonwealth Bank of Australia, said in a note.