Oil steady as China counters recession fears

Beijing likely to increase domestic energy supply capacity

HOUSTON:

Oil prices held steady on Monday in choppy trading as China’s continuation of loose monetary policy offset fears that high inflation and energy costs could drag the global economy into recession.

Brent crude futures were down 2 cents, or 0.02%, to $91.67 a barrel by 1537 GMT, recovering from a 6.4% fall last week. US West Texas Intermediate crude was up 4 cents, or 0.4%, at $85.57 after a 7.6% decline last week.

“US inflation remains a front topic and with the Fed set to raise rates at least into next year, there are fears that demand destruction will escalate,” said Dennis Kissler, Senior Vice President of Trading at BOK Financial.

China’s central bank rolled over maturing medium-term policy loans on Monday while keeping its key interest rate unchanged for a second month, in a signal that loose monetary policy would be maintained.

Beijing will also greatly increase domestic energy supply capacity and step-up risk controls in key commodities including coal, oil, gas and electricity, a senior National Energy Administration official said on Monday.

Meanwhile, a strong US dollar and the likelihood of further interest rate increases by the Federal Reserve are helping to contain price gains.

Inflation in the United States remains stubborn and growth in European Union countries is expected to weaken to 0.5%, International Monetary Fund (IMF) official Gita Gopinath said on Monday.

“It’s been another turbulent few weeks in oil markets from global growth concerns to super-sized OPEC+ output cuts and it seems they’re yet to fully settle down,” said Craig Erlam, Senior Markets Analyst at OANDA.

“Brent has seen lows of $82 and highs of $98, so perhaps what we’re now seeing is it finding its feet somewhere in the middle.”

 

Published in The Express Tribune, October 18^th, 2022.

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