Oil prices down as demand for oil in power generation cools off

ISTANBUL

Oil prices were down Friday on the back of market expectations that easing gas and coal prices would curb the fuel switching that had raised demand for oil.

International benchmark Brent traded at $84.47 a barrel at 0744 GMT for a 0.17% loss after ending the previous session ended at $84.61 a barrel.

American benchmark West Texas Intermediate (WTI) traded at $82.44 per barrel at the same time for a 0.07% decrease after ending the previous session at $82.50 a barrel.

The rise in coal and gas prices in the past weeks, which had triggered supply shortages in China, India and Europe, led to power providers switching to oil products in support of higher prices. However, as countries like China and India fought back against high energy prices, coal and gas prices eased in the last few days and demand for oil products in power generation cooled off.

Earlier this week, China's state planner, the National Development and Reform Commission, said that it was studying ways to lower coal prices and would take all necessary steps to bring costs within a reasonable range.

Renewed COVID-19 concerns in Asia and the forecast of a milder winter in the US is also undermining oil demand.

According to the National Oceanic and Atmospheric Administration's annual winter outlook released on Thursday, winter for much of the US is expected to be warmer than average.

Moreover, market shrinkage concerns stemming from the supply-demand imbalance in global markets continue to restrain the downward movement of prices.

Nonetheless, experts warn of concerns amid a tighter market and higher demand with the winter season around the corner, despite the fall in global gas and coal prices.