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Oil prices fall despite wars raging

Friday, July 25 15:44:18

Oil fell below $107 a barrel today as plentiful supply outweighed concerns over conflicts in the Middle East and Ukraine.

Brent crude for September delivery traded 18 cents lower at $106.89 a barrel by 1400 GMT. The contract had closed 96 cents lower on Thursday.

"There is ample prompt supply of crude oil, but the geopolitics in Ukraine, Gaza, Iraq and Libya is providing support," said Olivier Jakob, an analyst at Petromatrix in Zug, Switzerland.

He added that poor refining margins in Europe pointed to slack demand in the region.

U.S. crude for September delivery underperformed, falling 87 cents to $101.14 a barrel, after settling $1.05 lower.

Traders said that higher-than-expected gasoline stocks at the U.S. oil hub in Cushing, Oklahoma had led to lower refinery margins and an expectation that currently robust demand from U.S. plants would dry up.

German business sentiment fell for a third consecutive month in July, suggesting firms in Europe's largest economy are worried about global political crises.

In Libya, oil production has risen to 500,000 barrels per day, but there is no progress on reopening its Brega oil port after an agreement to end a protest there, a spokesman for state-run National Oil Corporation said.

Authorities in Gaza said Israeli forces shelled a shelter at a U.N.-run school on Thursday, killing at least 15 people as the Palestinian death toll in the conflict exceeded 760 and attempts at a truce remained elusive.

Members of the European Union on Thursday considered proposals targeting state-owned Russian banks vital to Moscow's faltering economy in what would be the most serious sanctions so far over the Ukraine crisis.

Oil prices were also supported by U.S. Labor Department unemployment data, which suggested the economic recovery remained on track with initial weekly jobless claims at their lowest since February 2006.

However, the International Monetary Fund cut its 2014 forecast for global economic growth to take into account weakness early in the year in the United States and China, the world's two biggest economies.

Oil inventories in Cushing fell another 163,000 barrels over the four days to July 22, data from Genscape Inc showed on Thursday, deepening a slump that had already dragged stockpiles to their lowest in six years.

Drawdowns at Cushing - delivery point for West Texas Intermediate contracts - have dropped stocks there to near what traders consider to be minimum operating levels, fueling a sharp rise in prompt U.S. crude oil prices.

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