Oil whipsaws, then steadies as energy crunch feeds volatility

Commodities59 minutes ago (Oct 12, 2021 01:11PM ET)

(C) Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base

By Stephanie Kelly

NEW YORK (Reuters) -Oil prices steadied after whipsawing in a volatile session on Tuesday, as traders weighed the effect that higher energy costs could have on the global economic recovery.

Brent crude fell 32 cents to $83.33 a barrel by 12:53 a.m. EDT (1653 GMT). It earlier hit a high of $84.23 a barrel and a low of $82.72 a barrel. On Monday it hit $84.60, its highest since October 2018.

U.S. oil futures rose 6 cents to $80.58 a barrel, after ranging between $81.62 and $79.47.

Authorities from Beijing to Delhi scrambled to fill a yawning power supply gap on Tuesday, roiling global stock and bond markets on worries that rising energy costs will stoke inflation.

Power prices have surged to record highs in recent weeks, driven by shortages in Asia and Europe, with an energy crisis in China expected to last through year end, crimping growth in the world’s second-largest economy and top exporter.

In London and southeast England, a tenth of fuel stations remained dry panic fuel buying last month, the Petrol Retailers Association said.

“People are starting to realize that the risk of higher energy prices could derail growth,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “Is energy demand a good thing or a bad thing?”

Persistent supply chain disruptions and inflation pressures are constraining the global economic recovery from the pandemic, the International Monetary Fund said as it cut growth outlooks for the United States and other industrial powers.

In its World Economic Outlook, the IMF trimmed its 2021 global growth forecast to 5.9% from the 6.0% forecast it made in July. It left a 2022 global growth forecast unchanged at 4.9%.

Even as demand grows, the Organization of the Petroleum Exporting Countries and allied producers, known as OPEC+, are sticking to plans to restore output gradually rather than quickly.

The price of Brent has surged by more than 60% this year. As well as OPEC+ supply restraint, the rally has been spurred by record European gas prices, which have encouraged a switch to oil for power generation in some places.

European gas at the Dutch TTF hub stood at a crude oil equivalent of about $169 a barrel, based on the relative value of the same amount of energy from each source, Reuters calculations based on Eikon data showed.

Oil whipsaws, then steadies as energy crunch feeds volatility

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Stay in Touch

To follow the best weight loss journeys, success stories and inspirational interviews with the industry's top coaches and specialists. Start changing your life today!

Related Articles