The energy shortage sparked concerns about economic recovery, and U.S. crude oil traded volatile to close above $80

On Tuesday (October 12), U.
S.
oil futures rose $0.
12, or 0.
15%, to settle at $80.
64 / barrel; Oil fell $0.
23, or 0.
27 percent, to $83.
42 a barrel, after an intraday high of $84.
23 and a low of $82.
72
.
Shortages of natural gas and coal as winter approaches in the northern hemisphere have prompted some in the power sector to switch to fuels such as diesel and fuel oil, and investors are volatile
as they assess how the global power crisis will affect oil demand this winter.

On Tuesday, authorities in Asia's two largest energy consumers scrambled to fill a widening power supply gap, hitting global stock and bond markets on fears that rising energy costs would fuel inflation
.
Rebecca Babin, senior energy trader at CIBC Private Wealth Management, said it was difficult to predict what would happen when natural gas prices in Europe reached the equivalent of $250 a barrel of crude oil
.

James Whistler, SSY's global head of energy derivatives in Singapore, said the crude oil market was embroiled in a broad rally across the energy sector, with high gas and coal prices boosting the prospect
of power companies switching to more oil-based power generation.
Electricity prices have risen to record levels
in recent weeks, driven by energy shortages in Asia, Europe and the United States.
Analysts estimate that gas-to-oil conversion in the power generation sector could increase global crude demand by 250,000 to 750,000 b/d
.
Saudi Aramco estimates that the gas shortage has increased oil demand by about 500,000 b/d, and Citi estimates it could reach 1 million b/d
.

Meanwhile, the International Monetary Fund (IMF) on Tuesday cut its growth outlook for the United States and other major industrialized countries, saying ongoing supply chain disruptions and price pressures were hampering the global economy's recovery
from the coronavirus pandemic.
The IMF's World Economic Outlook lowered its global growth forecast for 2021 to 5.
9 percent from 6.
0 percent in July and left its 2022 forecast unchanged at 4.
9 percent
.

Phil Flynn, an analyst at Price Futures Group, said there was a growing awareness that the risk of rising energy prices could derail economic growth
.
Is energy demand a good thing or a bad thing?

Oil futures spread and time skew (SKEW) analysis shows a bullish outlook for oil prices as
traders reflect expectations of falling inventories.
The premium of front-month WTI futures over the next delivery contract is testing a three-year high, highlighting the tight
supply in the market.
This happens in October, a month when spreads typically narrow
due to seasonal inventory build-up in Cushing, Oklahoma, a storage center.
In percentage points, the premium was the largest since 2011, when the Cushing neighborhood hit a traffic bottleneck and WTI rose more than 17 percent
that month.

Last week, the spread between put and call options, also known as skew, fell below zero
for the first time since 2019.
The skewed downside suggests that oil traders are more willing to pay price insurance
for big gains rather than big falls.
There is an inverse correlation between skew and oil prices, with a daily average of 0.
3
in the 120 days ending Monday.