Oil tumbles on inflation woes, Iraq exports

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

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LONDON, Aug. 30 (Reuters) – Oil prices fell Tuesday on fears that an inflation-induced weakening of global economies would reduce fuel demand, and as Iraq’s crude oil exports have not been affected by clashes.

Brent crude futures before the October settlement fell $2.45, or 2.33%, to $102.64 a barrel at 1022 GMT, after rising 4.1% on Monday, the largest gain in more than a month.

The October contract expires Wednesday and the more active November contract was $101.12 a barrel, down 1.76%.

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US West Texas Intermediate crude stood at $95.46 a barrel, down $1.55 or 1.6%, after rising 4.2% in the previous session.

In many of the world’s largest economies, inflation is near double digits, 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 rate hikes that could curb economic growth and squeeze fuel demand. read more

“The economy will remain sluggish with the Fed’s aggressive monetary policy. Investors are now waiting for Friday’s monthly employment data,” said Kunal Sawhney, chief executive officer of Kalkine Group.

According to UBS analyst Giovanni Staunovo, prices fell after comments from Iraqi state-owned SOMO that the country’s oil exports are unaffected by unrest. read more

Baghdad sees its heaviest fighting in years as clashes between Shia Muslim groups culminate in a second day. read more

SOMO also said on Tuesday it could divert more oil to Europe if necessary. read more

The market awaits the upcoming meeting of the Organization of Petroleum Exporting Countries and allies such as Russia, known as OPEC+, on September 5.

Saudi Arabia last week raised the possibility of production cuts from OPEC+, which sources say could coincide with an increase in supplies from Iran if it strikes a nuclear deal with the West.

“Possible reductions in OPEC+ production are why the oil market has turned a blind eye to weakening equities and the strong dollar,” said Tamas Varga of oil brokerage PVM.

Meanwhile, the American Petroleum Institute, an industry group, will release data on U.S. crude oil inventories Tuesday at 4:30 p.m. EDT (2030 GMT).

US crude oil inventories are likely to fall by 600,000 barrels in the week to Aug. 26, with inventories of distillates and gasoline also falling, a preliminary Reuters poll on Monday showed.

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

Our Standards: The Thomson Reuters Trust Principles.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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