NEW YORK (CNBC) - Oil prices edged up on Monday in choppy trading as China’s continuation of loose monetary policy was partly offset by fears that high inflation and energy costs could drag the global economy into recession.
Brent crude futures last rose $1.16, or 1.27%, to $92.16 a barrel, recovering from a 6.4% fall last week. U.S. West Texas Intermediate crude was up $1.02, or 1,19%, at $85.95 after a 7.6% decline last week.
Vandana Hari, energy analyst at Vanda Insights, said a 3-4% slump at Friday’s settlement was encouraging some bargain-hunting on Monday, but momentum looked weak in thin trading volumes.
China’s central bank rolled over maturing medium-term policy loans on Monday while keeping the interest rate unchanged for a second month in a signal that the central bank would continue to maintain loose monetary policy.
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 economic data is expected to be released this week, with third-quarter GDP growth possibly rebounding from the previous quarter, but 2022 threatens to be China’s worst-performing year in almost half a century.
The third-quarter GDP data, along with September activity data, is due for release on Oct. 18 at 0200 GMT.
Meanwhile a strong U.S. dollar and further interest rate increases from the U.S. 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.
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.