Commodities Turn Down As China Intervenes To Tame Soaring Coal Prices

Commodities Turn Down As China Intervenes To Tame Soaring Coal Prices

Commodities Turn Down As China Intervenes To Tame Soaring Coal Prices

Oil prices fell after China’s government said it was looking for ways to reduce record-high coal costs and that it would ensure coal mines were working at full capacity as Beijing attempted to address a power shortage. Brent crude finished the day at $85.08 a barrel, up 75 cents from the previous closing. In the United States, West Texas Intermediate (WTI) futures rose 52 cents to over $83 per barrel.

Chinese coal and other commodity prices plunged early in the day, dragging oil prices down from a peak earlier in the day. However, costs have climbed in the last two months. Since the beginning of September, Brent has risen around 19%, while WTI has gained around 21%.

Oil markets hit multi-year highs earlier this week, following a global coal and gas scarcity that has forced a switch to diesel and fuel oil for power generation. According to market sources, oil stocks in the United States climbed by over 3.3 million barrels in the latest week, according to statistics from the American Petroleum Institute industry group.

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On Tuesday, oil futures hit multi-year highs as a global energy supply crisis persisted while falling temperatures in China reawakened fears about the world’s largest energy consumer’s capacity to meet domestic heating demands.

China’s National Development and Reform Commission (NDRC) addressed government interference in coal prices during a meeting of critical coal producers late Tuesday, according to the China Electricity Council. Furthermore, rising coal and natural gas prices are expected to cause some Asian end-users to switch to lower-cost oil.

China has already started to experience colder weather, with temperatures in the north approaching freezing. In a second statement, the NDRC stated that it would ensure that coal mines were functioning at full capacity and that it expected to generate at least 12 million tonnes per day, an increase of over 1.6 million tonnes since late September.

However, according to official data issued on Monday, China’s economic growth has slowed to its lowest level in a year as a result of the power shortfall that is driving up expenses.

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