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HomeWorldOil prices slip ahead of build-up in U.S. crude inventory

Oil prices slip ahead of build-up in U.S. crude inventory

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Oil prices fell as much as $2 a barrel on Wednesday, under pressure from global central bank efforts to limit inflation and ahead of an expected build-up in U.S. crude inventories.

Brent crude prices for September were down $1.68, or 1.56 per cent, at $105.67 a barrel by 1352 GMT, while U.S. West Texas Intermediate (WTI) crude for August slipped $1.82, or 1.75 per cent, to $102.40. The WTI contract expires on Wednesday.

The more active September WTI contract was at $98.94 a barrel, down $1.79.

Oil prices had been extremely volatile in the previous session, caught in a tug-of-war between supply fears caused by Western sanctions on Russia and expectations of economic weakness and reduced demand as central bankers indicated they will raise interest rates to combat inflation.

On Friday, open interest in New York Mercantile Exchange futures fell to its lowest since September 2015 as concerns that the Federal Reserve will keep raising U.S. interest rates led investors to cut exposure to risky assets.

Adding to bearish sentiment, crude stocks in the United States rose by about 1.9 million barrels for the week ended July 15, market sources said on Tuesday, citing American Petroleum Institute figures. That was close to a rise of 1.4 million barrels forecast in a Reuters poll.

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Official weekly crude and fuel inventory data from the U.S. Energy Information Administration (EIA) is expected on Wednesday at 1430 GMT, with traders watching for implied demand.

Meanwhile, Libya resumed exporting crude oil from Es Sider port, the oil ministry said on Wednesday.

Analysts, however, expect oil prices to continue to derive support from supply tightness while U.S. shale oil production expands at a modest pace.

“With little room for OPEC+ to increase production, the oil market will struggle to balance out in the coming months, thereby propping up prices,” said Stephen Brennock of oil broker PVM.

ConocoPhillips’ chief executive on Tuesday warned of looming crude oil shortages and price volatility.

Limited supplies have kept Brent above $105 a barrel and prompted Brent inter-month spreads in wide backwardation at about $4.30 a barrel. In a backwardated market, front-month prices are higher than those in future months.

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