Oil Dips as Trade Weighs US Inventories Against Russian Supply Blockade 

By Barani Krishnan

Investing.com — Oil prices dipped on Tuesday as market participants weighed the potential for U.S. stockpile builds last week against news that some oil exports had been suspended on the Russia-to-Europe Druzhba pipeline that transits Ukraine.

, the benchmark for US crude, settled down 26 cents, or 0.3%, at $90.50 per barrel. It rose just over $1.80 at the day’s peak for a session high of $92.63, and slid $1.70 later to reach an intraday bottom of $89.06.  

, the London-traded global benchmark for crude, settled down 34 cents, or 0.4%, at $96.31. It rose just over $1.70 for a session high of $98.36, and tumbled almost $3.65 for an intraday bottom of $93.01.

Both WTI and Brent rose about 2% in Monday’s session. That was after last week’s slump that wiped 10% off the U.S. benchmark and nearly 14% off the London-based crude gauge. WTI also hit a six-month low of $87.03 last week while Brent slumped to $92.79, its lowest since February.

In Tuesday’s session, crude prices initially rose, extending their rally from Monday on news of a fresh blockade in Russian oil supplies in Eastern Europe. Russian pipeline monopoly Transneft said Ukraine had suspended oil flows on the pipeline because Western sanctions had prevented a payment from Moscow for transit fees. 

That news was, however, offset by reports of fresh developments in Iran nuclear talks that could bring as much as 500,000 to one million barrels more of daily supply to the market if Tehran manages to free itself from sanctions placed on its oil over suspected atomic bomb building.

“Much attention is falling on Iran nuclear deal talks and that could be a wildcard in providing much needed supplies,” said Ed Moya, analyst at online trading platform OANDA.

Adding to the market’s downside was uncertainty on whether the United States had really not seen another big round of crude and fuel supply builds last week, despite data suggesting it hadn’t.

Market participants are on the lookout for the weekly oil inventory data due after market settlement from API, or the American Petroleum Institute.

The API will release at approximately 4:30 PM ET (20:30 GMT) a snapshot of closing balances on U.S. crude, gasoline and distillates for the week ended Aug 5. The numbers serve as a precursor to official inventory data on the same due from the U.S. Energy Information Administration on Wednesday.

Analysts tracked by Investing.com expect the EIA to report a slide of just 73,000 barrels for last week, versus the 4.47-million barrel rise reported during the previous week to July 29.

On the front, the consensus is for a draw of 633,000 barrels over the 163,000-barrel build in the previous week.

With , the expectation is for a drop of 667,000 barrels versus the prior week’s deficit of 2.4 million.

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