Oil Stocks Ease on Tightness, Easing Sense

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Oil Stocks Ease on Tightness, Easing Sense

Bloomberg oil fell as US data on stockpiles and production signaled an easing of market tightness and a key European pipeline restarted flows.

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West Texas Intermediate fell to $91 a barrel in early Asian trading after softer-than-expected US inflation data. The US government figures show that inventories hit the highest since December as local output went up. In Europe, crude flows from Russia along the southern Druzhba network resumed as a payment dispute was resolved.

The price of crude fell to a six month low earlier this month as investors worried that an economic slowdown would crimp demand. The drop erased all the gains seen since Russia's invasion of Ukraine, as sanctions on the world's biggest energy exporter increased. The International Energy Agency and the Organization of Petroleum Exporting Countries are giving investors a look at the outlook on both of them later in the day.

The market's easing is evident as time differentials have narrowed. The WTI's prompt spread of its two nearest contracts has shrunk to 70 cents a barrel in backwardation compared to $2.88 a month ago. The global benchmark for Brent fell to $1.16 a barrel, down by two-thirds in the same period.

A warning that members have severely limited spare capacity was issued by the OPEC and allies including Russia earlier this month. The remaining buffer should only be used with great caution in response to severe supply disruptions, it said.

The softer-than-expected US inflation print on Wednesday was driven by a decline in gasoline prices. The average retail pump price is poised to decline back below $4 a gallon after peaking at a record above $5 in mid-June, according to auto club AAA.

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