Oil hovers near multi-year highs amid ongoing energy crunch

October 20, 2021 02:39 PM AEDT | By Arpit Verma

Oil hovers near multi-year highs amid ongoing energy crunch — Image source: Stock Photo Oil Prices Rise | Source: © Designer491 | Megapixl.com

Crude oil’s robust recovery

A significant rise in crude oil prices has been witnessed due to significant switching from gas-to-oil for the generation of electricity in power plants as the gas prices shoot up. Rising coal prices in China have also increased the demand for crude oil.

The ongoing power crunch in the country has pushed down China's economic growth, which fell to its lowest level in the last one year. The skyrocketing natural gas and coal prices in Asia are expected to cause users to switch to lower-cost crude oil, as an alternative.

Image Description-Oil supply constraints

As per the American Petroleum Institute, crude oil inventories coupled with gasoline and distillate inventories tumbled last week. However, the US government data on inventories is due on Wednesday.

Also Read: Crude oil dips on China’s supply plan

Bottom Line

Brent Crude oil prices hovered near multi-year highs on Tuesday amidst a strong demand due to solid recovery from pandemics and tight supplies.

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