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Oil steady as positive Chinese signals counter recession fears
Published by Jessica Weisman-Pitts
Posted on October 17, 2022
3 min readLast updated: February 3, 2026
Global Banking & Finance Review®
Company
Published by Jessica Weisman-Pitts
Posted on October 17, 2022
3 min readLast updated: February 3, 2026
By Arathy Somasekhar
HOUSTON (Reuters) -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 11:37 a.m. EDT (1537 GMT), recovering from a 6.4% fall last week. U.S. West Texas Intermediate crude was up 4 cents, or 0.4%, at $85.57 after a 7.6% decline last week.
“U.S. 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.
China will further increase reserve capacities for key commodities, another state official told a news conference in Beijing.
Chinese trade and third-quarter GDP data, along with September activity data, are due to be released on Tuesday, with quarterly growth possibly rebounding from the previous quarter but annual growth threatening to be China’s worst in almost half a century.
Meanwhile, a strong U.S. dollar and the likelihood of further interest rate increases by the Federal Reserve are helping to contain price gains.
St. Louis Fed President James Bullard on Friday said inflation had become “pernicious” and difficult to arrest, warranting 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 expected to weaken to 0.5%, International Monetary Fund 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.”
Oil supply is likely to remain tight after OPEC and allies including Russia pledged on Oct. 5 to cut output by 2 million barrels per day while a war of words between OPEC’s de facto leader Saudi Arabia and the United States could foreshadow more volatility.
OPEC+ output cuts attracted portfolio investors and funds back to the oil markets with continued heavy buying of crude oil futures and options for a second week after OPEC+ cut its production target more than expected.
(Additional reporting by Noah Browning in London, Mohi Narayan in New Delhi and Florence Tan in Singapore; Editing by Susan Fenton, Kirsten Donovan, David Goodman, Ed Osmond and Paul Simao)
Monetary policy refers to the actions taken by a country's central bank to control the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI) or Producer Price Index (PPI).
Brent crude oil is a major trading classification of crude oil originating from the North Sea. It is used as a benchmark for pricing oil globally and is known for its light and sweet characteristics.
The Federal Reserve, often referred to as the Fed, is the central bank of the United States. It regulates the U.S. monetary and financial system and implements monetary policy to promote maximum employment and stable prices.
OPEC+ output cuts refer to the agreement among the Organization of the Petroleum Exporting Countries (OPEC) and other oil-producing nations to reduce oil production to stabilize or increase oil prices.
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