Last month saw a phenomenal rise in the prices of fossil fuels....

Last month saw a phenomenal rise in the prices of fossil fuels. The energy crisis in Europe and China pushed the prices of coal and natural gas to multi-year high levels, raising concerns about higher inflation.Europe depends on natural gas for heating purposes during cold weather. As the supply of natural gas dwindled due to a sharp rise in demand, the competition between European and Asian buyers led to a surge in the prices.Last year, the COVID-19 pandemic-induced challenges delayed/postponed several energy projects. As recovery from the pandemic began at a much faster rate than anticipated, the energy and resources industries were not ready for such a steep rise in demand.The Chinese authorities have taken several steps to ease the supply constraints and keep a close watch on any speculative or hoarding activity around the commodity. The government is also planning to fix the prices of certain grades of coal, and for starters, 5500-NAR grade prices are expected at US$69 per tonne. Coal is not alone in this correction phase, natural gas and other commodities are also following the same suit.China’s Q3 GDP growth rate was the lowest in decades. Also, September quarter GDP data of the US was below market expectations. Shrinking of the GDP growth rate is worrying the market and putting pressure on the commodity market.China is expected to continue its efforts to bring coal prices down further in order to curb the rising energy prices. More downside in coal prices can be expected in the near term.