Oil prices weakened on Tuesday (18/10/2022) as the market weighed signs of tightening crude supplies against growing concerns that a global economic slowdown will erode demand for crude this year.

The crude oil market got off to a slow start to the week, holding on to most of last week's losses amid growing signs that the United States will enter a recession within the next 12 months, according to Bloomberg economists.

The gloomy forecast comes amid rising inflation in the country, with sharp interest rate hikes by the Federal Reserve, which have so far done little to ease price pressures.

London-traded Brent crude futures were little changed at $91.93 a barrel on Tuesday, while U.S. West Texas Intermediate crude futures rose 0.3% to $84.75 a barrel by 9:53 p.m. ET (01:53 GMT). Both contracts moved little on Monday.

Concerns over future Chinese demand weighed slightly, after President Xi Jinping signaled that the country has no plans to ease its strict zero-COVID policy. A series of lockdowns and restrictions under the policy have severely hampered China’s economic activity this year, denting demand for crude in the world’s largest oil importer.

But the Chinese government outlined more spending measures to support the economy, a move that could spur a recovery in local commodity demand. The People’s Bank of China also kept interest rates unchanged on Monday, indicating it intends to keep monetary policy accommodative for now.

Members of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) recently voiced their support for the cartel’s 2 million barrels per day of output cuts. The cuts, announced earlier this month, are intended to help stabilize oil prices after they fell from yearly highs.

The US has criticized the cuts and has also released more supply from the Strategic Petroleum Reserve (SPR) to limit rising crude prices. The world's largest economy is struggling to cope with inflation that has hit a 40-year high, driven largely by fuel prices.

The Federal Reserve is expected to continue raising interest rates at a rapid pace to combat inflation, a move that is expected to boost the dollar and weigh on oil markets. Rising interest rates are also expected to cool global economic growth, which is a negative signal for the crude market.

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