Written by Stephanie Kelly
NEW YORK (Reuters) – Oil prices stabilized after falling in a volatile session on Tuesday, as traders weigh the impact of rising energy costs on the global economic recovery.
Brent crude was down 4 cents at $83.61 a barrel by 10:46 am ET (1446 GMT). Earlier, it recorded a high of $84.23 a barrel and a low of $82.72 a barrel. On Monday, it reached $84.60, the highest level since October 2018.
US oil futures rose 28 cents to $80.80 a barrel, after ranging between $81.62 and $79.47.
Authorities from Beijing scrambled to Delhi to plug a huge energy supply gap on Tuesday, sending global stock and bond markets volatile on fears that rising energy costs will stoke inflation.
Energy prices have jumped to record levels in recent weeks, driven by shortages in Asia and Europe, with an energy crisis in China expected to last through the end of the year and hamper growth in the world’s second-largest economy and largest exporter.
A tenth of gas stations remain dry after a severe shortage of truck drivers prompted panic buying of fuel last month, the Gasoline Retailers Association of London and southeast England said.
“People are starting to realize that the risks 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?
Ongoing supply chain disruptions and inflation pressures are constraining the global economy’s recovery from the COVID-19 pandemic, the International Monetary Fund said, as it slashed growth forecasts for the United States and other major industrial powers.
In its World Economic Outlook, the International Monetary Fund cut its global growth forecast for 2021 to 5.9% from 6.0% it forecast in July. The forecast for global growth for 2022 was left unchanged at 4.9%.
Meanwhile, as demand grows as economies recover from pandemic lows, the Organization of the Petroleum Exporting Countries (OPEC) and allied producers, known as OPEC+, are sticking to plans to gradually restore production rather than boost supply quickly.
The price of Brent crude is up more than 60% this year. In addition to the OPEC+ supply restraint, the rise was driven by record European gas prices, which encouraged a shift to oil for power generation in some places.
Reuters calculations based on Eikon data showed that European gas at the Dutch TTF center on Tuesday amounted to the equivalent of $169 a barrel, based on the relative value of the same amount of energy from each source.
(Reporting by Stephanie Kelly in New York; Additional reporting by Alex Lawler and Aaron Sheldrake; Editing by Margarita Choi and Jason Neely)
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