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Oil prices fall, US contract hits January low

World oil prices fell on Tuesday (Aug 19), with the New York benchmark below US$95 (S$118.48) a barrel for the first time since January ahead of the weekly US inventories report and the contract's expiration.

NEW YORK: World oil prices fell on Tuesday (Aug 19), with the New York benchmark below US$95 (S$118.48) a barrel for the first time since January ahead of the weekly US inventories report and the contract's expiration.

West Texas Intermediate (WTI) for delivery in September tumbled US$1.93, closing at US$94.48 a barrel. In London Brent North Sea crude for October delivery, the key European futures contract, slipped a modest four cents to finish at US$101.56 (S$2.40) a barrel. Earlier in the session Brent sank to US$101.07 (S$126.05), its lowest level since late June 2013.

The September WTI was under technical pressure as speculative traders sold off ahead of Wednesday's contract expiration, said Robert Yawger of Mizuho Securities USA. "People are unwinding some of the contract they have on their book," Yawger said.

The downward trend was exacerbated by market expectations of a third consecutive week of increases in crude oil supplies at the Cushing, Oklahoma terminal, the price settlement point for WTI, said Yawger.

The Cushing build was due in part to a Kansas refinery outage since early August caused by a fire. Reports that the refinery could come back on line quickly failed to move WTI higher, Yawger said.

Overall US crude inventories are expected to fall by 900,000 barrels, according to a poll of analysts by Dow Jones Newswires. Brent extended its losses after shedding US$1.93 (S$2.40) and settling at a 14-month low Monday.

"The downswing that has been observed in recent weeks and was briefly interrupted last Friday is continuing. It is still under pressure from a combination of factors: plentiful supply, a lack of supply outages and weak refinery demand," Commerzbank said in a research note.