Oil prices steadied in early Asian trade on Tuesday as a weaker U.S. dollar lent support, although rising shale production and fears that stubbornly high inflation could lead the world economy into a recession limited gains. Brent crude futures rose 9 cents or 0.1% to $91.71 per barrel by 1:20 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained 6 cents or 0.1% to $85.52 per barrel.
The dollar fell against a basket of major currencies after Britain’s new finance minister Jeremy Hunt axed much of the government’s so-called “mini-budget”, lifting risk appetite. The dollar index against a basket of currencies dropped 0.82% to 112.11. A weaker dollar makes oil cheaper for non-U.S. buyers. Rising shale output has helped to ease an oil supply crunch and capped price gains.
Oil output in the Permian Basin of Texas and New Mexico, the biggest U.S. shale oil basin, is forecast to rise by about 50,000 barrels per day (bpd) to a record 5.453 million bpd this month, the Energy Information Administration said. Expectations that China will keep with loose monetary policy to help its economy hobbled by COVID-19 restrictions has also lent support to oil prices. The country’s central bank rolled over maturing medium-term policy loans on Monday while keeping its key interest rate unchanged for a second month.
Meanwhile, OPEC+ member states have been lining up to endorse the steep cut to its output target agreed this month after the White House accused Riyadh of coercing some other nations into supporting the move.