Oil prices rose on Tuesday, recouping earlier losses, as falling temperatures in China, the world’s biggest energy consumer, revived concerns about its ability to meet heating demand needs amid power and coal shortages.
Brent crude rose 24 cents, or 0.3 percent, to $84.57 a barrel by 0541 GMT after falling 0.6 percent on Monday. The contract is still up nearly 7 percent this month, reports Reuters.
US West Texas Intermediate futures gained 35 cents, or 0.4 percent, to $82.79 a barrel, having risen 0.2 percent in the previous session and nearly 10 percent this month.
Brent fell on Monday after China released growth figures that disappointed the market but with temperatures falling as the northern hemisphere winter approaches and heating demand increasing, prices of oil, coal and natural gas are likely to remain elevated, traders and analysts said.
Colder weather has already started to grip China, with the temperature forecast to fall to near freezing in northern areas, according to AccuWeather.com.
“Tightness in energy markets meant supply side issues remain prevalent and commodities prices remain supported,” said an energy derivatives trader based in Singapore.
Coal futures in China rose as much as 7.8 percent on Tuesday, while riskier assets like equities were also higher. The rising coal and natural gas prices in Asia are expected to cause some end-users to switch to lower-cost oil as an alternative.
However, the power crunch that is sending prices higher is also hurting Chinese economic growth, which fell to the lowest in a year, according to official data on Monday.
CHINA: The Chinese economy hit its slowest pace of growth in a year in the third quarter, hurt by power shortages and wobbles in the property sector, highlighting the challenge facing policymakers as they seek to prop up a faltering recovery while reining in the real estate sector.
Gross domestic product expanded 4.9 percent from a year ago, missing forecasts, as attempts by Beijing to curb lending to the property sector exacerbated the fallout from electricity shortages which sent factory output back to levels last seen in early 2020, when heavy COVID-19 curbs were in place.
The world’s second-largest economy had staged an impressive rebound from last year’s pandemic slump but the recovery has lost steam from the blistering 18.3 percent growth clocked in the first quarter.
Under President Xi Jinping, a drive to make structural changes that address long-term risks and distortions, which has involved crackdowns on the property sector and technology giants, as well as carbon emission cuts, has taken a toll.
