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Oil prices stable on US dollar weakness; weigh recession fears

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(Reuters) – Oil prices stabilized in early Asian trade on Tuesday as a weaker US dollar provided support, although rising shale production and fears that persistently high inflation could send the global economy into recession limited profits.

Brent crude futures were up 9 cents, or 0.1 percent, to $91.71 a barrel at 1:20 GMT, while West Texas Intermediate (WTI) crude oil futures were up 6 cents, or 0.1 percent, to 85, 52 dollars a barrel.

The dollar fell against a basket of major currencies after Britain’s new Chancellor of the Exchequer Jeremy Hunt scrapped much of the government’s so-called “mini-budget”, fueling risk appetite.

The dollar index against a basket of currencies fell 0.82 percent to 112.11. A weaker dollar makes oil cheaper for non-US buyers.

Rising shale production has helped to ease the oil supply shortage and contain price increases.

Oil production in the Permian Basin of Texas and New Mexico, the largest US shale oil basin, is expected to rise about 50,000 barrels per day (bpd) this month to a record 5.453 million bpd, according to the Energy Information Administration.

Expectations that China will stick to accommodative monetary policy to help its economy hampered by COVID-19 restrictions have also supported oil prices. The country’s central bank rolled over maturing medium-term policy loans on Monday, while leaving its key interest rate unchanged for a second month.

Meanwhile, OPEC+ member states have lined up to approve the sharp cut in the output target agreed this month after the White House accused Riyadh of forcing a number of other countries to back the move.