NEW YORK—Oil prices edged lower in New York Tuesday on rising US crude inventories and prospects of a Chinese demand slowdown as Beijing tightened interest rates again to cool its economy.
New York’s main contract, West Texas Intermediate (WTI) light sweet crude for May, slipped 33 cents to close at $108.34 a barrel.
Earlier, London’s Brent North Sea crude hit a new two-year high, as the fight for control of Libya gave no hint at when the North African state’s valued light crude exports to European refineries would resume.
Brent for delivery in May hit $122.89 a barrel – the highest level since August 2008 – before settling at $122.22, a rise of $1.16 from Monday’s closing price.
“Outside influences may indicate higher energy prices across the board” said Rich Ilczyszyn of Lind Waldock, citing “the same suspects” of Middle East tensions and Brent’s surging prices.
“But … the WTI definitely has supply on hand,” he added.
US crude oil inventories have increased by about 20 million barrels since the beginning of the year, including 10 million just in March.
Analysts expect the US government’s next weekly report on petroleum stockpiles, due Wednesday, will show another increase.
Ilczyszyn said “it is time” for the oil rally to take a breather.
“High sustained oil prices would be terrible on the economy.”
China’s move could take off the upward pressure. Beijing said Tuesday it would raise one-year deposit and lending rates by 25 basis points, its fourth rate hike since late last year.
The latest move takes the one-year deposit and lending rates to 3.25 percent and 6.31 percent.
“A rate hike was to be expected at some point,” noted VTB Capital analyst Andrey Kryuchenkov.
Traders would also be waiting to see how efforts by Libya’s rebels to export crude go.
The rebels were set Tuesday to begin exporting oil for the first time since mid-March after a tanker capable of holding $100 million worth of crude docked at an eastern port.