Oil prices fall ahead of US inventory data

Crude oil storage tanks at Kinder Morgan Terminal in Sherwood Park, near Edmonton, Alberta, Canada, November 14, 2016. REUTERS/Chris Hellgren

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(Reuters) – Oil prices fell by as much as $2 a barrel on Wednesday, under pressure from the World Central Bank’s efforts to curb inflation and ahead of an expected increase in US crude inventories.

Brent crude prices for September fell $1.68, or 1.56%, to $105.67 a barrel by 1352 GMT, while US West Texas Intermediate crude for August fell $1.82, or 1.75%, to $102.40. The WTI contract expires on Wednesday.

The most active contract for September was the WTI at $98.94 a barrel, down $1.79.

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Oil prices were highly volatile in the previous session, caught in a tug of war between supply concerns stemming from Western sanctions on Russia and expectations of economic weakness and lower demand as central bankers indicated they would raise interest rates to combat inflation. Read more

On Friday, open interest in New York Mercantile Exchange futures fell to its lowest level since September 2015 as concerns that the Federal Reserve would continue to raise US interest rates led investors to cut exposure to risky assets.

Market sources said on Tuesday, citing figures from the American Petroleum Institute, that crude oil inventories in the United States increased by about 1.9 million barrels in the week ending July 15, adding to the bearish sentiment. That was close to a rise of 1.4 million barrels in a Reuters poll forecast.

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Official weekly crude oil and fuel inventory data from the US Energy Information Administration (EIA) is expected on Wednesday at 1430 GMT, as traders monitor implied demand.

Meanwhile, the Libyan Oil Ministry said on Wednesday that Libya has resumed exporting crude oil from Es Sider port.

However, analysts expect oil prices to continue to be supported by tight supply while US shale oil production expands at a modest pace.

“With OPEC+ having little room to increase production, the oil market will struggle to balance in the coming months, thus supporting prices,” said Stephen Brennock of BVM oil brokerage.

ConocoPhillips (COP.N) The CEO warned on Tuesday of a looming crude oil shortage and price volatility. Read more

Limited supplies kept Brent above $105 a barrel and pushed Brent crude’s inter-month spreads wide lower at around $4.30 a barrel. In a lagging market, the forward month’s prices are higher than the forthcoming months’ prices.

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Additional reporting by Florence Tan in Singapore and Laura Sanicola in New York; Editing by Barbara Lewis and David Goodman

Our criteria: Thomson Reuters Trust Principles.

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