SULAIMANI (ESTA) — Oil prices dropped on Wednesday after the Chinese government stepped up efforts to tame record high coal prices and ensure coal mines operate at full capacity.
Brent crude futures fell 40 cents to $84.71 a barrel at 0617 GMT, paring a 75-cent rise in the previous session.
U.S. West Texas Intermediate (WTI) crude futures were down 20 cents to $82.76 per barrel.
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.
“With coal and gas prices easing and with the relative strength index (RSI) technical indicators still in overbought territory, the odds of a sharp, but material fall in oil prices are rising,” Reuters quoted Jeffrey Halley, senior market analyst at OANDA, as saying.
China’s National Development and Reform Commission said late on Tuesday that 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, according to Reuters.
“Brent crude could fall to $82 and WTI to $78.50 a barrel, and still comfortably remain in a strong bull market… Even if oil was to stage a $5 pullback, I continue to believe that it will be short in duration,” analyst Halley said.
