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Oil whipsaws, then steadies as energy crunch feeds volatility

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/File Photo
Summary
Energy crunch stokes inflation, economic recovery concernsIMF lowers global growth outlookChina rust-belt province warns of shortages in energy crisis

NEW YORK, Oct 12 (Infoday) – 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. read more

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. read more

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

“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. read more

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. read more

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, Infoday calculations based on Eikon data showed.

Reporting by Stephanie Kelly in New York; additional reporting by Alex Lawler and Aaron Sheldrick; Editing by Marguerita Choy and Jason Neely

Our Standards: The Thomson Infoday Trust Principles.

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