Title: Oil prices slide after three-day rally

Jun 29, 2022 03:25AM ET

By: AnalysisWatch

Oil prices fell on Wednesday, taking a break after gaining for three sessions, as concerns about the global economy weighed while tight supply curbed losses.

Brent crude futures for August dropped 98 cents, or 0.8%, to $117.00 a barrel by 0647 GMT. The August contract will expire on Thursday and the more-active September contract was at $113.03, down 77 cents, or 0.7%.

U.S. West Texas Intermediate (WTI) crude futures slid 62 cents, or 0.6%, to $111.14 a barrel.

Both contracts rose more than 2% on Tuesday as concerns over tight supplies due to Western sanctions on Russia outweighed fears of that demand may slow in a potential future recession.

Saudi Arabia and the United Arab Emirates have been seen as the only two members of the Organization of the Petroleum Exporting Countries (OPEC) with spare capacity to make up for lost Russian supply.

However, comments from UAE Energy Minister Suhail al-Mazrouei and French President Emmanuel Macron this week indicated little room for these producers to increase output further.

Analysts also warned that political unrest in Ecuador and Libya could tighten supply further.

More changes to Russian oil trade may come after the G7 economic powers agreed on Tuesday to explore ways to cap the price of Russian oil, allowing more supplies into the market while curbing Moscow's revenue.

However, traders and analysts are sceptical about how it would work and noted such an agreement would require cooperation from China and India.

In the United States, crude inventories are forecast to have fallen for the last two weeks, according to a Reuter’s poll.

The U.S. government's weekly petroleum status report last week was delayed due to a hardware issue. The data for both weeks will published together on Wednesday.

Data from American Petroleum Institute showed gasoline and distillates stocks rose while crude inventories fell for the week ending June 24, according to market sources citing API figures on Tuesday.