Brent crude is stable as the market reconciles inflation issues and supply concerns

A picture of the emblem of the Organization of the Petroleum Exporting Countries (OPEC) at its headquarters in Vienna, Austria, March 21, 2016. REUTERS/Leonard Voiger

LONDON (Reuters) – Oil prices stabilized on Tuesday as the market balanced supply concerns with concerns that inflation-fuelled weakness in global economies would dampen demand.

Brent crude futures for October settlement fell 9 cents, or 0.09%, to $105 a barrel by 0841 GMT, after rising 4.1% on Monday, the biggest increase in more than a month.

The October contract expires on Wednesday and the November contract is the most active It was at $103.03 a barrel, up 0.1%.

US West Texas Intermediate crude was at $97.18 a barrel, up 17 cents, or 0.18%, after rising 4.2% in the previous session.

Inflation is approaching double-digit territory in many of the world’s largest economies, a level not seen in nearly half a century. This could prompt central banks in the United States and Europe to resort to more sharp interest rate increases that could limit economic growth and affect fuel demand. Read more

The price drop was capped by the possibility of tighter supplies.

Saudi Arabia last week raised the possibility of production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, known as OPEC+, which sources said could coincide with increased supplies from Iran if it concludes a nuclear deal with it. the West.

The group is scheduled to meet on September 5.

“The potential reduction in OPEC + production is the reason why the oil market is heading towards weak stocks and a strong dollar,” said Tamas Varga of BVM oil brokerage.

Russia is set to cut oil and gas condensate production in August by 2% from July, Kommersant newspaper said on Tuesday, citing sources familiar with the data.

And political violence on Monday night in Iraq, the second largest producer in the Organization of the Petroleum Exporting Countries (OPEC), supported prices. Read more

The American Petroleum Institute, an industry group, is due to release data on US crude stocks at 4:30 PM ET (2030 GMT) on Tuesday.

A preliminary Reuters poll showed on Monday that crude oil inventories in the United States are likely to fall by 600,000 barrels in the week ending August 26, as distillate and gasoline stocks fell.

(Additional reporting by Rowena Edwards, Moyo Chu in Singapore.) Editing by Christian Schmolinger

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