Oil prices turned down after the Chinese government flagged that it was looking for ways to tame record high coal prices – and that it would ensure coal mines operate at full capacity as Beijing moved to ease a power shortage.
Chinese coal prices and other commodity prices slumped in early trade, which in turn pulled oil prices down from an uptick earlier in the day.
Oil markets had hit multi-year highs earlier in the week on the back of a global coal and gas crunch, which has driven 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.
US West Texas Intermediate (WTI) crude futures fell 134 cents to $81.62 a barrel at 0945 GMT, reversing a 52-cent gain from Tuesday.
Brent Crude futures dropped 122 cents to $83.86 a barrel, eclipsing a 75-cent rise in the previous session.
The China Electricity Council said late on Tuesday that China’s National Development and Reform Commission (NDRC) discussed government intervention in coal prices at a meeting of key coal producers.
