Using variable in nginx conf

Question

This works in my Nginx config:

    # This works
    proxy_pass http://GitLab-CE:9080;

... but this does not:

    # does not work
    set $upstream_gitlab GitLab-CE;
    proxy_pass http://$upstream_gitlab:9080;

This was copied from a different working example which uses a hyphen and a different port.

    # this works
    set $upstream_deluge binhex-delugevpn;
    proxy_pass http://$upstream_deluge:8112;

I thought perhaps something to do with the dash, but I have another config which also uses a hyphen in its name (see above) and it works. I have tried various forms of quotation which doesn't seem to help either. What could be going on here? I am at a loss. What is it about GitLab-CE that doesn't work yet binhex-delugevpn does work? Is Nginx seeing CE has some hexidecimal math?

Full context:

# make sure that your dns has a cname set for gitlab and that your gitlab container is not using a base url

server {
    listen 443 ssl;
    listen [::]:443 ssl;

    server_name gitlab.*;

    include /config/nginx/ssl.conf;

    client_max_body_size 0;

    # enable for ldap auth, fill in ldap details in ldap.conf
    #include /config/nginx/ldap.conf;

    location / {
        # enable the next two lines for http auth
        auth_basic "Restricted";
        auth_basic_user_file /config/nginx/.htpasswd;

        # enable the next two lines for ldap auth
        #auth_request /auth;
        #error_page 401 =200 /login;

        include /config/nginx/proxy.conf;
        resolver 127.0.0.11 valid=30s;
        set $upstream_gitlab GitLab-CE;
        proxy_pass http://$upstream_gitlab:9080;
    }
}

I should note that 127.0.0.11 is indeed the correct resolver and the names GitLab-CE and binhex-delugevpn do correctly resolve.

Of course there is no need to use a variable when it is only being referenced a single time but this follows the templates from linuxserver.io's letsencrypt Docker image.

EDIT: more context

Here is /config/nginx/nginx.conf.

It is unmodified by me.

## Version 2018/01/29 - Changelog: https://github.com/linuxserver/docker-letsencrypt/commits/master/root/defaults/nginx.conf

user abc;
worker_processes 4;
pid /run/nginx.pid;
include /etc/nginx/modules/*.conf;

events {
        worker_connections 768;
        # multi_accept on;
}

http {

        ##
        # Basic Settings
        ##

        sendfile on;
        tcp_nopush on;
        tcp_nodelay on;
        keepalive_timeout 65;
        types_hash_max_size 2048;
        # server_tokens off;

        # server_names_hash_bucket_size 64;
        # server_name_in_redirect off;

        client_max_body_size 0;

        include /etc/nginx/mime.types;
        default_type application/octet-stream;

        ##
        # Logging Settings
        ##

        access_log /config/log/nginx/access.log;
        error_log /config/log/nginx/error.log;

        ##
        # Gzip Settings
        ##

        gzip on;
        gzip_disable "msie6";

        # gzip_vary on;
        # gzip_proxied any;
        # gzip_comp_level 6;
        # gzip_buffers 16 8k;
        # gzip_http_version 1.1;
        # gzip_types text/plain text/css application/json application/x-javascript text/xml application/xml application/xml+rss text/javascript;

        ##
        # nginx-naxsi config
        ##
        # Uncomment it if you installed nginx-naxsi
        ##

        #include /etc/nginx/naxsi_core.rules;

        ##
        # nginx-passenger config
        ##
        # Uncomment it if you installed nginx-passenger
        ##

        #passenger_root /usr;
        #passenger_ruby /usr/bin/ruby;

        ##
        # Virtual Host Configs
        ##
        include /etc/nginx/conf.d/*.conf;
        include /config/nginx/site-confs/*;

}


#mail {
#       # See sample authentication script at:
#       # http://wiki.nginx.org/ImapAuthenticateWithApachePhpScript
#
#       # auth_http localhost/auth.php;
#       # pop3_capabilities "TOP" "USER";
#       # imap_capabilities "IMAP4rev1" "UIDPLUS";
#
#       server {
#               listen     localhost:110;
#               protocol   pop3;
#               proxy      on;
#       }
#
#       server {
#               listen     localhost:143;
#               protocol   imap;
#               proxy      on;
#       }
#}
daemon off;

EDIT 2:

I have verified that Nginx seems to be doing some "tolower" conversion when using variables.

I renamed my GitLab container to gitlab-ce and it worked fine. I renamed my deluge container (and made appropriate edits to the .conf) to binhex-deLugevpn and it stopped working.

Then I renamed it back to binhex-deluge but in the .conf file I put set $upstream_deluge bInHeX-dElUgEvPn;

And it worked. So, nginx (1.14.2) from linuxserver/letsencrypt seems to be doing some lower conversions on variables.

I tried looking find /config -type f -print0 | xargs -0 grep -i lower and found nothing.