Oil prices slump as inventories and rate hikes stoke demand fears

Oil pump cylinders are seen at the Vaca Muerta shale oil and gas field in the Patagonian province of Neuquen, Argentina January 21, 2019. REUTERS/Agustin Marcarian

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  • Oil prices fall for second session
  • Libyan NOC restarts production at several oil fields
  • Gazprom resumes gas flows to EU via Nord Stream 1 gas pipeline
  • ECB raises interest rates

LONDON, July 21 (Reuters) – Oil prices fell more than $5 on Thursday after rising U.S. petrol stocks and an ECB rate hike stoked concerns over demand and that the return of oil supplies from Libya has eased supply concerns.

Brent crude futures fell $3.88, or 3.6%, to $103.04 a barrel as of 12:24 GMT after falling 0.4% in the previous session. U.S. West Texas Intermediate crude futures fell $3.79, or 3.8%, to $96.09 after falling 1.9% on Wednesday.

Both were down more than $5 earlier in the session.

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Oil futures trading volumes have been weak and prices volatile as traders face weaker energy demand with tighter supply resulting from the loss of Russian barrels following the invasion of Ukraine by the country.

The European Central Bank joined many other central banks on Thursday in raising interest rates, focusing on tackling runaway inflation rather than the economic slowdown, which may weigh on demand for oil. Read more

The Bank of Japan, meanwhile, has kept interest rates extremely low to stimulate stalled economic growth. Read more

U.S. gasoline inventories (USOILG=ECI) rose 3.5 million barrels last week, government data showed Wednesday, far exceeding analysts’ forecasts.

“Gasoline demand in the United States is struggling to kick into high gear during the peak summer driving season,” said PVM analyst Stephen Brennock.

Libya’s National Oil Corp (NOC) said on Wednesday crude production resumed at several oilfields after force majeure on oil exports was lifted last week.

On the natural gas front, Gazprom (GAZP.MM) has resumed flows via the Nord Stream 1 gas pipeline which supplies more than a third of Russian gas exports to the European Union. Read more

However, one of Canada’s main oil export arteries, the Keystone pipeline, was operating at reduced rates for a third day on Wednesday, operator TC Energy said. Read more

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Additional reporting by Florence Tan in Singapore and Stephanie Kelly in New York Editing by Jason Neely and David Goodman

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