Oil drops for fear inflation will dampen demand growth


A gas station attendant prepares to refuel a car in Rome, Italy, January 4, 2012. REUTERS / Max Rossi

MELBOURNE, Oct.13 (Reuters) – Oil prices fell on Wednesday, after a mixed end in the previous session, amid fears that soaring coal and natural gas prices in China, India and Europe is fueling inflation and slowing global growth, reducing demand for oil.

A strong US dollar, trading near a year-ago high, has also weighed on oil prices, as it makes oil more expensive for those holding other currencies. Read more

US West Texas Intermediate (WTI) crude futures fell 71 cents, or 0.9%, to $ 79.93 a barrel at 2:47 a.m. GMT after gaining 12 cents on Tuesday.

Brent crude futures fell 70 cents, or 0.8%, to $ 82.72 a barrel, extending a loss of 23 cents on Tuesday.

The International Monetary Fund slashed its growth outlook for the United States and other major economies on Tuesday, fearing that supply chain disruptions and cost pressures are slowing down the global economic recovery from the coronavirus pandemic. Read more

Commonwealth Bank analysts highlighted the IMF’s concern that “momentum has weakened and uncertainty has increased.”

However, oil watchers still wonder whether soaring gas and coal prices will lead to increased demand for petroleum products for power generation.

“High gas and thermal coal prices are increasingly expected to be likely to stimulate demand for alternative fuels such as diesel and fuel oil,” analysts from ANZ Research said in a note. .

The market is also awaiting data on US oil inventories, delayed by a day after the Columbus Day holiday on Monday.

Analysts polled by Reuters estimate that US crude inventories rose 100,000 barrels in the week to October 8, which would mark a third straight week of increases.

They also estimated that gasoline inventories rose by about 100,000 barrels, while distillate inventories, which include diesel, heating oil and jet fuel, fell by about 1 million barrels.

Data from the American Petroleum Institute, an industry group, is due Wednesday at 4:30 p.m. EDT (8:30 p.m. GMT) and from the US Energy Information Administration on Thursday.

Reporting by Sonali Paul; Edited by Christian Schmollinger

Our Standards: The Thomson Reuters Trust Principles.

Leave A Reply

Your email address will not be published.