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London oil prices drift lower

LONDON: Oil prices drifted lower in lethargic trading on Tuesday ahead of the latest report on inventories in the United States. World benchmark North Sea Brent blend crude oil futures for October delivery were unchanged at $16.26 a barrel at 1609 GMT, while October West Texas Intermediate crude futures in New York were down five cents at $17.77.

Oil traders continued to keep on eye on the situation in the Middle East, where renewed tension between the United States and Iraq has raised the temperature, but the main focus was still supply and demand in the Atlantic Basin.

Prices in the North Sea have picked up recently as demand from the United States and other areas, such as South Africa, have mopped up supply.

But figures released on Tuesday showed that oil refineries in the old 12 countries of the European Union took in less crude oil last month than in June as refinery utilisation rates fell nearly one percentage point to 85.25 percent.

The U.S. stocks figures from the American Petroleum Institute, due for release after markets close on Tuesday, were expected to set the tone for the oil market over the next couple of days. A Reuter survey of oil traders found a wide range of forecasts for last week's change in primary crude oil stocks, from no change to an increase of two million barrels.

"There is some support coming from the North Sea market where buying is strong through early September, pushed by arbitrage to the U.S.," says Leslie Nicholas, an analyst at GNI Research.

Nicholas added, however, "it will be interesting to see if the markets begin taking on board the medium-term negative influence of events in Iraq once the military posturing is over."

Iraq has been unusually cooperative with United Nations officials recently as part of its effort to get lifted the ban on its oil exports which has been in place since the Gulf War.

Crude prices in dollars per barrel:

Aug 22 Aug 18

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Dated Brent

$16.25 $16.25

London IPE Brent futures (October)

$16.26 $16.26

NYMEX light crude futures (September) $18.20 $18.25-Reuter