Jul 20, 2022 02:55 AM ET
By: AnalysisWatch
Oil prices fell more than $1 a barrel on Wednesday, pressured by global central bank efforts to curb inflation and ahead of an expected build in U.S. crude inventories as product demand weakens.
By 02:45 AM ET, Brent crude for September was down $1.50, or 1.4%, at $105.85 a barrel, while U.S. West Texas Intermediate (WTI) crude for August slipped $1.40, or 1.3%, to $102.82 a barrel. The WTI contract expires later on Wednesday.
The more active September WTI contract was at $99.09 a barrel, down $1.65.
Oil prices swung back and forth in the previous session, caught in a tug-of-war between supply fears caused by Western sanctions against Russia and pressure from central bankers who signaled they would raise interest rates to fight inflation.
Both contracts closed about 1% higher Tuesday as global supplies are tight and the intermonth range for Brent remains at about $4.40 a barrel. Front-month prices are higher than future-month prices in a backwardation market, indicating tight supply.
On Friday, open interest in futures on the New York Mercantile Exchange fell to the lowest level since September 2015 as investors reduced risky assets such as commodities amid concerns the Federal Reserve would raise U.S. interest rates further.
Market sources said on Tuesday that crude oil inventories in the United States rose by about 1.9 million barrels in the week ended July 15, citing figures from the American Petroleum Institute. This was close to the 1.4 million barrel increase forecast in a Reuters poll.
Official weekly crude and fuel inventory data from the U.S. Energy Information Administration (EIA) is due at 11:30 AM ET on Wednesday, and traders are watching for implied demand.
U.S. 3:2:1 and gasoline crack spreads-measures of refinery margins-fell to their lowest levels since April on Tuesday, indicating weaker fuel demand.
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