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Oil slips and blows after gains driven by global energy crisis

Crude oil storage tanks are seen in an aerial photograph at the Cushing Oil Hub in Cushing, Oklahoma, United States, April 21, 2020. REUTERS / Drone Base

TOKYO, Oct. 12 (Reuters) – Oil prices edged down on Tuesday, falling for the first time in four days in what analysts have called a pause after weeks of gains fueled by a rebound in global demand that is helping energy shortages in major economies.

Brent crude fell 6 cents to $ 83.59 a barrel at 4:40 a.m. GMT, after hitting three-year highs on Monday on track to a 1.5% advance.

US oil fell 13 cents to $ 80.39 a barrel, after also gaining 1.5% in the previous session, when it hit its highest level in about seven years.

“There is still a lot of momentum behind the rally in oil and the fundamentals remain extremely favorable,” said Craig Erlam, senior market analyst at OANDA. “Will it be a surprise to see oil return to triple digits later this year?” Probably not.

Electricity prices have hit record highs in recent weeks, driven by energy shortages in Asia, Europe and the United States. Soaring natural gas prices are also encouraging power producers to swap cleaner-burning fuel for petroleum. Read more

Switching to oil from natural gas for power generation could increase global crude demand by 250,000 to 750,000 barrels per day, analysts have estimated.

In China, where major industrial regions are grappling with power shortages, thermal coal futures were up again on Tuesday with prices gaining more than 10%. read more The government has also announced that it will completely liberalize the country’s thermal energy market.

Rising energy prices are also adding to inflationary pressures in recovering economies. Wholesale inflation in Japan was at its highest for 13 years in September, according to data released Tuesday. Read more

Qatar, the world’s largest producer of liquefied natural gas (LNG), told customers on Monday it was unable to help lower energy prices and deliver more fuel on the market.

“We are at the maximum, insofar as we have given all our customers their amounts due,” Qatari Energy Minister Saad al-Kaabi said. “I am unhappy that gas prices are high.” Read more

Reporting by Aaron Sheldrick; Editing by Tom Hogue and Edwina Gibbs

Our Standards: Thomson Reuters Trust Principles.

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