• Oil prices bounced back Monday, recouping some of Friday's heavy losses.
• U.S. oil slid 13% on Friday for its worst day since April 2020 as fears over the omicron variant's impact on demand sent prices tumbling.
• "Friday's price slide was excessive," said analysts at Commerzbank.

Oil prices jumped Monday as traders bet that Friday's sharp sell-off, prompted by fears that the new omicron Covid variant will curb demand for petroleum products, was overdone.

West Texas Intermediate crude futures, the U.S. oil benchmark, gained $1.80, or 2.6%, to settle at $69.95 per barrel. Earlier in the session it traded as high as $72.93, although the contract drifted lower throughout the session and was unable to hold the key $70 level.

WTI tumbled 13% on Friday for its worst day since April 2020. It also closed below its 200-day moving average — a closely followed technical indicator — for the first time since November 2020.

Brent crude, the international oil benchmark, settled 0.99% higher at $73.44 per barrel. The contract declined 11.55% on Friday, and along with WTI registered a fifth straight week of losses.

"Friday's price slide was excessive," said analysts at Commerzbank. "Admittedly, the omicron variant is fueling concerns about demand, but it is not yet possible to put any serious figure on what effect this will genuinely have on demand."

Even before Friday's sharp drop oil had been trending lower after WTI hit a seven-year high above $85 in October. Brent crude hit a three-year high last month.

Given oil's strong 2021 rebound, analysts at RBC added that some of Friday's sell-off can be attributed to traders locking in profits.

"At least part of the air pocket lower on Friday was a function of winding down risk, potentially for the year," the firm said Sunday in a note to clients. "Following a strong 11 months of pricing, oil traders would rather de-risk and protect the nest egg, than fight the tide of market moving events like COVID for another month into year-end."

Oil's seesaw moves come ahead of a key meeting between OPEC and its oil-producing allies, where the group will decide on production policy for January. The alliance, known as OPEC+, has been returning 400,000 barrels per day to the market each month as it unwinds the historic production cuts it implemented in April 2020 as the pandemic sapped demand for petroleum products.

In addition to the latest price action, the group will be evaluating the supply and demand trajectory after the U.S. and other nations last week announced plans to tap the Strategic Petroleum Reserve in an effort to curb the rapid rise in fuel costs. The Biden administration said that the U.S. would release 50 million barrels from the SPR.

Wall Street's divided over what OPEC+ may announce when it meets Thursday. "With uncertainty over omicron, we expect that OPEC will shelve its target to increase output in January and keep its quota flat," Morgan Stanley wrote in a note to clients.

Citi, on the other hand, predicts that OPEC+ will "hold the line, and stick to its planned 400-k b/d quota increase."

— CNBC's Michael Bloom contributed to this report.