Oil prices ease ahead of U.S. inventory data

An oil pumpjack operates in Signal Hill, south of Los Angeles, California on April 21, 2020, a day after oil prices dropped to below zero as the oil industry suffers steep falls in benchmark crudes due to the ongoing global coronavirus pandemic. Frederic J. BROWN / AFP.

Oil prices edged down on Wednesday, pressured by global central bank efforts to tame inflation and ahead of expected builds in U.S. crude inventories as product demand weakens.

Brent crude prices for September fell 37 cents, or 0.3%, to $106.98 a barrel by 0340 GMT, while U.S. West Texas Intermediate (WTI) crude for August slipped 69 cents, or 0.7%, to $103.53 per barrel. The WTI contract will expire later on Wednesday.

The more active September WTI contract was at $100.24 a barrel, down 50 cents. Oil prices whipsawed in the previous session, caught in a tug-of-war between supply fears due to Western sanctions on Russia and pressures on indications from central bankers that they will raise interest rates to combat inflation.

Both contracts settled about 1% higher on Tuesday on tight supplies globally which have also kept the prompt Brent intermonth spreads in wide backwardation at about $4.40 a barrel.

Front-month prices are higher than those in future months in a backwardated market, indicating tight supplies. On Friday, open interest in New York Mercantile Exchange futures fell to their lowest since September 2015 as investors cut risky assets like commodities, worried that the Federal Reserve will keep raising U.S. interest rates.

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