Oil settles lower as Russian pipeline flow halt appears temporary, demand fears mount

Sticker reads crude oil on the side of a storage tank in the Permian Basin in Mentone, Loving County, Texas, U.S. November 22, 2019. REUTERS/Angus Mordant

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  • Russia’s oil exports halted via southern section of Druzhba pipeline
  • EU proposes ‘final’ text to resuscitate Iran nuclear deal
  • API data shows crude oil inventories rose last week – sources
  • Dollar drops slightly as traders await US inflation report
  • Recession, demand expectations are also weighing on the market

NEW YORK, Aug 9 (Reuters) – Oil prices edged lower on Tuesday after a choppy session as fears a slowing economy could dampen demand rivaled news that some oil exports were suspended. oil on the Druzhba pipeline between Russia and Europe which passes through Ukraine.

Crude prices have been under pressure for weeks as fears mounted that a recession could reduce demand for oil.

Brent crude settled at $96.31 a barrel, losing 34 cents, or 0.4%. US crude West Texas Intermediate (WTI) settled at $90.50 a barrel, down 26 cents, or 0.3%. During the session, both benchmarks rose and fell more than $1 a barrel.

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Ukraine halted oil flows on the Druzhba pipeline to parts of central Europe because Western sanctions prevented Moscow from paying transit fees.

Flows along the southern route of the Druzhba gas pipeline were affected while the northern route serving Poland and Germany was not interrupted.

Oil initially rose on news from the pipeline and expectations that the shutdown would tighten supplies, but prices reversed as details became clearer about what caused the disruption and flows were expected to resume. in a few days. Read more

“Given the fact that it is not the Russian side that is shutting off the pipe, but the Ukrainian side, this could be a situation that can be resolved as soon as possible,” said Bob Yawger, director of energy futures. at Mizuho in New York. a rating.

Prices were pressured by talks of a last ditch effort by European nations to revive the Iran nuclear deal. On Monday, the European Union presented a “definitive” text to revive the 2015 agreement with Iran. A senior EU official said a final decision on the proposal, which requires US and Iranian approval, was expected in “very, very few weeks”.

Talks have dragged on for months without a deal.

Iran’s crude exports, according to tanker trackers, are at least 1 million barrels a day below their rate in 2018, when former US President Donald Trump quit the nuclear deal.

Oil is now down more than $40 from its peak following Russia’s invasion of Ukraine, which briefly took Brent to $139 a barrel.

Crude oil inventories in the United States were also signaling a slowdown in demand, according to market sources citing figures from the American Petroleum Institute. Crude inventories rose about 2.2 million barrels for the week ended August 5. Analysts had forecast a small drop of 400,000 barrels in crude inventories. Official government data is expected Wednesday at 10:30 a.m. EDT.

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Additional reporting by Alex Lawler, Sonali Paul and Emily Chow Editing by Louise Heavens, Mark Potter, Barbara Lewis and David Gregorio

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