Oil steady as recession fears counter positive Chinese signals
OIL prices were steady on Monday (Oct 17) as China’s continuation of loose monetary policy was offset by fears that high inflation and energy costs could drag the global economy into recession.
Brent crude futures rose 21 US cents, or 0.2 per cent, to US$91.84 a barrel by 1110 GMT, recovering from a 6.4 per cent fall last week. US West Texas Intermediate crude was at US$85.67 a barrel, up six US cents, or 0.1 per cent, after a 7.6 per cent decline last week.
Vandana Hari, energy analyst at Vanda Insights, said a 3-4 per cent slump at last Friday’s settlement was encouraging some bargain hunting on Monday, but momentum looked weak amid thin trading volumes.
China’s central bank rolled over maturing medium-term policy loans on Monday while keeping the interest rate unchanged for a second month, in a signal that the central bank would continue to maintain loose monetary policy.
Beijing would also greatly increase domestic energy supply capacity and step up risk controls in key commodities including coal, oil and gas, and electricity, a senior National Energy Administration official said on Monday.
China will further increase reserve capacities for key commodities, another state official told a news conference in Beijing.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
China is expected to release trade and economic data this week, with third-quarter gross domestic product (GDP) growth possibly set to rebound from the previous quarter, but 2022 is threatening to be China’s worst performing year in almost half a century.
The Chinese government is due to release third-quarter GDP data, along with September activity data, on Oct 18 at 0200 GMT.
Meanwhile a strong US dollar and further interest rate increases from the US Federal Reserve have limited price gains.
St Louis Fed president James Bullard said on last Friday that inflation had become “pernicious” and difficult to arrest, and warranted continued “frontloading” through larger rate increases of three-quarters of a percentage point.
Inflation in the United States remains stubborn and growth in European Union countries is due to weaken to half a per cent, Gita Gopinath, a senior official at the International Monetary Fund, said on Monday.
Oil supply is due to remain tight after the Organization of the Petroleum Exporting Countries and allies (Opec+) like Russia on Oct 5 pledged to cut output by two million barrels per day, as a war of words between Opec’s de facto leader Saudi Arabia and the United States could foreshadow more volatility. REUTERS
Share with us your feedback on BT's products and services
