Oil Down, Reverses Earlier Uptick as China Aims to Soften Power Shortage

Oil was down Wednesday morning in Asia, reversing its earlier upward trend. The Chinese government also indicated that it was searching for ways to curb coal prices that are at record highs, as well as to ensure coal mines operate at full capacity to alleviate a power shortage.

Brent oil futures fell 0.58% to $84.59 by 10:12 PM ET (2:12 AM GMT) and WTI futures were down 0.53% to $82.

Chinese coal prices and other commodity prices slumped as the Asian trading day opened, in turn dragging oil down from its earlier upward trend.

The black liquid hit multi-year highs earlier in the week as a global coal and gas shortage continues, incentivizing a switch to diesel and fuel oil for power generation.

“Ultimately, China’s coal output needs to increase to remedy its energy woes,” Commonwealth Bank commodities analyst Vivek Dhar said in a note.

China’s National Development and Reform Commission (NDRC) discussed government intervention in coal prices, the China Electricity Council said on Tuesday.

The NDRC also said in a separate statement that it would ensure coal mines operate at full capacity and aim to achieve at least 12 million tons per day of output, up more than 1.6 million tons from late September 2021.

Meanwhile, Tuesday’s U.S. crude oil data from the American Petroleum Institute showed a build of 3.294 million barrels for the week ended Oct. 15. Forecasts prepared by Investing.com predicted a 2.233-million-barrel build, while a build of 5.213 million barrels was recorded during the previous week.

Investors now await crude oil data from the U.S. Energy Information Administration, due later in the day.

Oil Down, Reverses Earlier Uptick as China Aims to Soften Power Shortage