By Rowena Edwards LONDON (Reuters) -Oil prices fell on Wednesday on expectations that Druzhba pipeline flows will resume shortly and demand concerns ahead of publication of key demand indicators. Brent crude futures were down $1.69, or 1.75%, to $94.62 a barrel at 1124 GMT. U.S. West Texas Intermediate crude futures were down $1.61 cents, or […]
Oil drops on Druzhba pipeline news and U.S. inflation expectations
By Rowena Edwards
LONDON (Reuters) -Oil prices fell on Wednesday on expectations that Druzhba pipeline flows will resume shortly and demand concerns ahead of publication of key demand indicators.
Brent crude futures were down $1.69, or 1.75%, to $94.62 a barrel at 1124 GMT.
U.S. West Texas Intermediate crude futures were down $1.61 cents, or 1.78%, at $88.89.
Russia’s pipeline monopoly Transneft said it planned to resume oil pumping through the southern branch of the Druzhba pipeline at 1600 Moscow time (1300 GMT), Russian state-owned news agency RIA reported.
Ukraine had suspended Russian oil pipeline flows to parts of central Europe since early this month because Western sanctions prevented it from receiving transit fees from Moscow, Transneft said on Tuesday.
Hungarian energy group MOL has transferred the transit fee for the use of the Ukrainian section of the pipeline, MOL said on Wednesday.
Demand fears also weighed on prices, analysts said.
“Fears of recession-induced demand destruction are the single-biggest price driver currently and the principal reason why Brent is trading sub-$100 a barrel,” said PVM analyst Stephen Brennock.
The U.S. consumer price index (CPI) report, due to be released at 1230 GMT, will be scrutinised for a steer on how steeply the U.S. Federal Reserve will raise interest rates in the coming months.
The report is likely to show underlying inflation pressures remain elevated as the Federal Reserve considers whether to embrace another supersized interest rate increase in September, which could curb economic activity and fuel demand.
U.S. crude oil stocks, meanwhile, rose by about 2.2 million barrels for the week ended Aug. 5, according to market sources citing American Petroleum Institute (API) figures. Analysts polled by Reuters had forecast crude inventories would rise by about 100,000 barrels. [API/S] [EIA/S]
Official government data is due later on Wednesday.
Though concerns over a potential global recession have weighed on oil futures recently, U.S. oil refiners and pipeline operators expect energy consumption to be strong for the second half of 2022, according to a Reuters review of company earnings calls.
(Reporting by Rowena EdwardsAdditional reporting by Emily Chow in Kuala LumpurEditing by David Goodman and Mark Potter)