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 4 cents to $ 83.61 a barrel by 10:46 a.m. EDT (1446 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 28 cents to $ 80.80 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, triggering global stock and bond market wobbles 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 to the end of the year and crimp growth in the world’s second-largest economy and top exporter.
In London and southeast England, a tenth of fuel stations are still dry after an acute truck driver shortage triggered panic fuel buying last month, the Petrol Retailers Association said.
“People are starting to realize that 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 economy’s recovery from the COVID-19 pandemic, the International Monetary Fund said as it cut growth outlooks for the United States and other major 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%.
Meanwhile, with demand growing as economies recover from pandemic lows, the Organization of the Petroleum Exporting Countries and allied producers, collectively known as OPEC+, are sticking to plans to restore output gradually rather than boost supply 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 on Tuesday 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.
(Reporting by Stephanie Kelly in New York; additional reporting by Alex Lawler and Aaron Sheldrick; Editing by Marguerita Choy and Jason Neely)
