Picture: 123RF/PIX NOO
Picture: 123RF/PIX NOO

London — Oil prices fell on Wednesday after the Chinese government stepped up efforts to tame record-high coal prices and ensure local mines operate at full capacity as Beijing moved to ease a power shortage.

Brent crude futures dropped 73c, or 0.9%, to $84.35 a barrel at 10.03am GMT, paring a 75c in the previous session, but still lingering close to multi-year highs.

US West Texas Intermediate crude futures for November, which expires on Wednesday, fell 68c, or 0.8%, to $82.28 a barrel. The more active WTI contract for December was down 80c, or 1%, to $81.64 a barrel.

“China is planning to take steps to combat the steep rises in the domestic coal market ... which could put considerable pressure on the coal price there and reverse the fuel switch to oil,” Commerzbank said.

Prices for Chinese coal and other commodities slumped in early trade, which pulled oil down from an uptick earlier in the day.

China’s National Development and Reform Commission said on Tuesday it would bring coal prices back to a reasonable range and crack down on any irregularities that disturb market order or malicious speculation on thermal coal futures.

Oil markets in general remain supported sue a global coal and gas crunch, which has driven a switch to diesel and fuel oil for power generation.

But the market on Wednesday was also pressured by data from the American Petroleum Institute industry group that showed US crude stocks rose by 3.3-million barrels for the week ended October 15, according to market sources.

That was well above nine analysts’ forecasts for a rise of 1.9-million barrels in crude stocks, in a Reuters poll.

However US gasoline and distillate inventories, which include diesel, heating oil and jet fuel, fell much more than analysts had expected, pointing to strong demand.

Data from the US Energy Information Administration is due later on Wednesday

Reuters

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