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Oil fell with risk assets ahead of a critical US inflation report and as investors digested a mixed report on supplies from an industry group.
West Texas Intermediate sank toward US$73 a barrel after jumping 7,5 percent over the previous three sessions as the White House said it would begin purchasing crude to replenish the emergency reserves after maintenance work later this year. Gains were also supported by wildfires in Canada that have cut output.
The US inflation data due later on Wednesday will be closely watched for a further read on the Federal Reserve’s likely interest-rate path in the second half as the economy shows signs of a slowdown that could undermine energy demand.
Ahead of the release, equities in Asia posted declines.
Crude has lost about 9 percent this year as worries over Fed tightening and a potential US recession outweighed a solid physical market and supply cuts by the Organization of Petroleum Exporting Countries and its allies. Still, Russian exports have continued to show little sign of ebbing despite Moscow saying its output curbs had almost hit a pledged goal of 500 000 barrels a day.
“It appears as though the US administration is still keen to refill the SPR later this year once maintenance at storage sites is complete,” said Warren Patterson, head of commodities strategy at ING Groep NV. “Obviously, this will also be price-dependent.”
The industry-funded report showed a mixed picture in the US ahead of official data later Wednesday. Nationwide oil stockpiles rose 3.6 million barrels last week, but inventories fell at the key Cushing, Oklahoma hub, the American Petroleum Institute reported, according to people familiar with the figures.
The snapshot also pointed to rising gasoline holdings but a drop for distillates. – Bloomberg
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