Brent steady as market juggles inflation concerns and supply fears

The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria March 21, 2016. REUTERS/Leonhard Foeger

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LONDON, Aug 30 (Reuters) – Oil prices were flat on Tuesday as the market balanced supply worries with fears that an inflation-induced weakening in global economies could dampen demand for fuel.

Brent crude futures for October settlement fell 9 cents, or 0.09%, to $105 a barrel at 0841 GMT, after climbing 4.1% on Monday, the biggest gain yet. one month.

October contract expires on Wednesday and November contract more active was at $103.03 a barrel, up 0.1%.

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U.S. 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 near 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 aggressive interest rate hikes that could dampen economic growth and weigh on fuel demand. Read more

The fall in prices was capped by the prospect of tighter supply.

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 say could coincide with an increase in supplies to Iran if it strikes a nuclear deal with the west.

The group is due to meet on September 5.

“The possible OPEC+ production cut is why the oil market has thumbed its nose at weaker stocks and dollar strength,” said Tamas Varga of oil broker PVM.

Russia is expected to cut production of oil and gas condensates in August by 2% from July, the Kommersant newspaper reported on Tuesday, citing sources familiar with the data, as Gazprom cut output.

And political violence on Monday night in Iraq, OPEC’s second largest producer, supported prices. Read more

The American Petroleum Institute, an industry group, is due to release U.S. crude oil inventory data at 4:30 p.m. EDT (2030 GMT) on Tuesday.

U.S. crude oil inventories likely fell by 600,000 barrels in the week to Aug. 26, with distillate and gasoline inventories also down, according to a preliminary Reuters poll on Monday.

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Reporting by Rowena Edwards, additional reporting by Muyu Xu in Singapore; Editing by Christian Schmollinger

Our standards: The Thomson Reuters Trust Principles.

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