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Oil diverges ahead of US crude inventory report

Oil prices in New York fell on Tuesday (July 29) on a weak US crude demand outlook, while European oil prices rose on concerns about Libya and new European Union sanctions on Russia.

NEW YORK: Oil prices in New York fell on Tuesday (July 29) on a weak US crude demand outlook, while European oil prices rose on concerns about Libya and new European Union sanctions on Russia.

US benchmark West Texas Intermediate for September delivery dropped 70 cents to US$100.97 a barrel on the New York Mercantile Exchange.

European benchmark Brent oil for delivery in September gained 15 cents to US$107.72 a barrel in London.

The Brent contract, which is more tied to international developments, finished higher after the European Union agreed to enact new sanctions on Russia, including on the state-controlled oil company Rosneft.

Analysts have also cited ongoing violence in oil-producer Libya, where a fuel depot near Tripoli's airport has been on fire for three days amid fighting between rival militias.

The chaos in Libya has raised doubts about the North African country's ability to restore crude output.

But the US oil market has been viewed as amply supplied. Some analysts expect that perception to strengthen Wednesday when the US Energy Information Administration releases its weekly crude inventory report.

"Possibly the market is anticipating that demand for crude is going to go down" in the US, said Andy Lebow, a senior vice president at Jefferies Bache.

The US refinery utilization rate last week stood at 93.8 per cent, up from 92.3 per cent a year ago and 93.0 per cent two years ago, according to EIA data.

Market watchers believe refineries will soon scale back output ahead of the end of the summer driving season in early September, reducing demand for crude oil.

There is "likely a chance that we're going to see an easing of a crude demand in the US," said Carl Larry, analyst at Oil Outlooks and Opinions.

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