Oil steady as recession fears counter positive Chinese signals

Oil prices were steady on Monday as China's continuation of loose monetary policy was offset by fears that high inflation and energy costs could drag the global economy into recession.

Brent crude futures rose 17 cents, or 0.2 per cent, to $91.80 a barrel by 0915 GMT, recovering from a 6.4 per cent fall last week. US West Texas Intermediate crude was at $85.67 a barrel, up 6 cents, or 0.1 per cent, after a 7.6 per cent decline last week.

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 would also greatly increase domestic energy supply capacity and step up risk controls in key commodities including coal, oil and 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.

Oil found support from a combination of factors, including Chinese President Xi Jinping's comments at the Party Congress that reassured accommodative policies for the economy, a positive sign for demand outlook, CMC Markets analyst Tina Teng said.

China is expected to release trade and economic data this week, with third-quarter GDP growth possibly set to rebound from the previous quarter, but 2022 threatening to be China's worst performing year in almost half a century.

Meanwhile, a strong US dollar and further interest rate increases from the US Federal Reserve limit price gains.

St. Louis Fed President James Bullard said on Friday inflation had become "pernicious" and difficult to arrest, and warranted 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 due to weaken to half a percent, Gita Gopinath, a senior official at the International Monetary Fund said on Monday.

Oil supply is due to remain tight after OPEC and allies like Russia pledged on Oct. 5 to cut output by 2 million barrels per day, as a war of words between OPEC's de facto leader Saudi Arabia and the United States could foreshadow more volatility.