Oil prices dip before US inventories report
LONDON – World crude oil prices fell slightly on Wednesday as traders awaited the release of a widely-monitored US government report on the country’s energy reserves.
New York’s main contract, light sweet crude for September delivery retreated 39 cents to 71.03 dollars a barrel.
London Brent North Sea crude for September delivery was 20 cents weaker at 74.08 dollars.
Later Wednesday, the US Department of Energy (DoE) will publish its snapshot of American oil inventories for last week.
New York crude had eased slightly on Tuesday on profit-taking amid expectations of a further US reserves buildup, after jumping eight dollars over the past three sessions on hopes of economic recovery.
It had climbed earlier this week to its highest level since late June, rising above 72 dollars.
“There’s been very limited movements in the oil prices,” said David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia.
“Oil is basically holding close to the levels it finished last night,” he added.
Both contracts had slipped on Tuesday after sharp gains in recent sessions, boosted by hopes of a global economic recovery but expectations of a likely rise in US energy stocks capped sentiment, analysts said.
“Traders are liquidating ahead of inventory data… traders don’t want to risk being long if stock reports will be bearish again,” said Tom Bentz, an analyst and broker at BNP Paribas Commodity Futures Inc.
A Dow Jones Newswires poll of analysts tipped US oil stocks to rise by 500,000 barrels in the week ended July 31 while gasoline reserves are seen falling by 1.4 million barrels during the same period.
The DoE report is a major focus for the oil market because the recession-struck United States is the world’s largest energy consuming nation, followed by number two China.
Looking ahead, the direction of crude futures prices would be dictated by global economic data especially that of the US economy, analysts said.
The release of July unemployment data on Friday by the US Labor Department is among the key indicators this week, they said.
“To maintain the 70-dollar level, we need more bullish developments that include an unemployment reading that is tepid and inventory levels that don’t swell too much,” said John Kilduff, senior vice president of energy at broker MF Global.