SINGAPORE: Brent slipped towards $108.50 a barrel on Wednesday, dragged down by a near $1 drop in US crude as inventories in the United States were expected to hit the highest level on record.
A Reuters poll of analysts revealed expectations that US crude stocks rose 2.4 million barrels to 400 million barrels last week, the highest level since the US Energy Information Administration started collecting data in 1982.
The poll was taken ahead of the EIA weekly inventory data due out later on Wednesday.
Brent crude for June delivery fell 27 cents to $108.71 per barrel by 0420 GMT after climbing 86 cents to $108.98 in the previous session.
June US crude dropped 80 cents to $100.48 per barrel after falling by as much as 93 cents in early trade on Wednesday.
This reversed Tuesday's gain when US crude rose 44 cents to close at $101.28 per barrel.
The fall in Brent was "100 percent" due to the drop in US crude, said Jonathan Barratt, chief executive of Sydney based commodity research firm Barratt Bulletin. And while Libyan exports are starting to come back, the supply situation from the North African nation is far from clear, he said.
"I think Brent will come under pressure from Libya," Barratt said, but added Libyan oil exports would have to be sustained without disruptions before there was an impact on Brent prices.
A second tanker is due to load oil at Libya's eastern Hariga port after it reopened under a deal between the government and rebels, an oil official said on Tuesday. Zueitina port has also reopened but two others remain closed.
Data from industry group the American Petroleum Institute on Tuesday showed that US oil inventories rose 3 million barrels last week, higher than the increase of 2.4 million barrels forecast by analysts.
The EIA data, however, is the industry standard that is watched more closely.
The European Union on Tuesday imposed further sanctions on Russia over the Ukraine crisis, freezing assets and issuing new visa bans on Russian officials and Ukrainian rebel leaders, as Russian President Vladimir Putin ruled out counter sanctions.
"It's extremely unlikely sanctions will extend into the crude oil markets. Europe wants oil and Russia wants cash," said Mike Keenan, head of commodities research at Societe Generale in Singapore.
Investors were also watching developments over Iran after the US targeted a Chinese businessman and a Dubai-based entity for alleged offences related to violations of sanctions.
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