Oil prices held steady in opening Asian trade on Tuesday, aided by a weaker US dollar, as surging shale output and concerns that persistently high inflation might push the global economy into recession, capped gains.
Brent crude futures had risen 9 cents, or 0.1%, to $91.71 per barrel, while the U.S. West Texas Intermediate (WTI) crude futures rose 6 cents, or 0.1%, to $85.52 a barrel.
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The dollar declined against a group of key currencies after Britain’s new finance minister, Jeremy Hunt, scrapped a large portion of the government’s so-called “mini-budget,” which doubled risk appetite.
The dollar index fell 0.82% to 112.11 versus a basket of currencies. A weakening dollar lowers the price of oil for non-US consumers. Soaring shale production has contributed to easing an oil supply shortfall while limiting price rises.
The Permian Basin of Texas and New Mexico, the largest shale oil basin in the United States, is expected to increase by around 50,000 barrels per day (BPD) this month to a record 5.453 million BPD, according to the Energy Information Administration.
Oil prices have been supported by hopes that China will maintain its loose monetary policy to boost its economy, which has been hampered by COVID-19 restrictions. On Monday, the country’s central bank rolled over maturing medium-term policy loans while holding its benchmark interest rate constant for the second month.
In the meantime, OPEC+ members have been queuing up to support the sharp reduction in output agreed this month, despite the White House accusing Riyadh of coercing certain other countries into supporting the decision.
Separately, MSCI’s broadest index of Asia-Pacific equities outside Japan climbed 0.43%, while the Nikkei in Japan jumped 0.6% on Tuesday. The S&P 500 and Nasdaq futures were both up 0.8%.