Crude oil prices remain flat during early Asian trade

18 Oct 2022 , 08:09 AM

Tuesday’s early Asian trading saw oil prices remain stable as the U.S. dollar declined, but gains were constrained by increased shale production and worries that persistently high inflation would push the global economy into recession.

Brent crude futures were up 9 cents, or 0.1%, to $91.71 per barrel. The price of a barrel of West Texas Intermediate (WTI) oil increased by 6 cents, or 0.1%, to $85.52.

The removal of a large portion of the government’s so-called “mini-budget” by Britain’s new finance minister, Jeremy Hunt, increased risk appetite and caused the dollar to decline against a basket of major currencies.

At 112.11, the dollar index versus a basket of currencies decreased by 0.82%. Oil costs less for non-American buyers when the dollar is lower.

Increased shale production has slowed price increases and eased the shortage of oil.

According to the Energy Information Administration, oil production in the largest U.S. shale oil basin, the Permian Basin of Texas and New Mexico is expected to increase by around 50,000 barrels per day (bpd) this month to a record 5.453 million bpd.

Oil prices have also been supported by expectations that China will maintain its lax monetary policy to aid its economy, which has been hindered by COVID-19 limitations. On Monday, the nation’s central bank renewed medium-term policy loans that were about to mature while leaving its benchmark interest rate steady for a second month.

The White House accused Riyadh of pressuring certain other countries into accepting the decision, and member states of OPEC+ have been lining up to back the drastic reduction in output objective announced this month.

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