Oil prices dropped today following a rise in US crude inventories, prompting concerns over crude oil demand.

Brent crude fell by 27 cents to $109.92 a barrel, while US oil was down by 32 cents to settle at $102.05, reported Reuters.

Crude prices dropped as the US Energy Information Administration’s (EIA) weekly report showed that overall US crude oil inventories increased by 947,000 barrels in the week ending 9 May, compared with expectations for a decline of 100,000 barrels.

Total US crude oil inventories stood at 398.5 million barrels as of last week.

"Total US crude oil inventories stood at 398.5 million barrels as of last week."

Oil prices fell further following the announcement from the Libyan National Oil Corp (NOC) that El Feel oilfield has resumed production.

In the previous session, investors were more focused on stocks at the key delivery hub in Cushing, Oklahoma, which according to EIA weekly data fell by 592,000 barrels, driving crude prices higher.

Ongoing concerns over the crisis in Ukraine also led to a rise in crude prices in the previous session, where pro-Moscow separatists were excluded from talks among Ukraine’s interim leaders on plans to give the eastern regions greater autonomy ahead of presidential elections on 25 May, which cast doubt over whether the move could defuse the political crisis.

In Vienna, six world powers and Iran have commenced discussions aimed at drafting an agreement for Tehran to curb its controversial nuclear programme in exchange for a phased end to the crippling sanctions that have cut its oil exports in half over the last two years.

Image: Libya’s El Feel oilfield resumes production. Photo: courtesy of Habbick.

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