Oil prices drop before US data

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IOL image oil rig generic FREE IMAGES An oil rig is shown in this file photo.

World oil prices dropped on Wednesday as traders looked ahead to the latest weekly snapshot of US crude inventories and a European Union summit centred on the eurozone debt crisis.

Brent North Sea crude for delivery in August fell 57 cents to $92.45 a barrel in London midday deals.

New York's main contract, light sweet crude for August, slipped 21 cents to $79.15 a barrel - below the psychologically important $80 threshold.

The US Department of Energy publishes inventory data at 16:30 SA time and against a backdrop of weak energy demand, analysts forecast that US crude stockpiles dropped by 500,000 barrels last week, a Dow Jones Newswires survey showed.

Meanwhile Justin Harper, a strategist at traders IG Markets Singapore, said that investors were not pinning hopes on an upcoming EU summit to discuss proposed reforms for the region's banking sector and rules on fiscal discipline.

The talks come as pressure increased on Europe to put its finances in order amid concerns that its debt crisis would lead to another global downturn.

“Markets are looking muddled at the moment. Investors are starting to (become) very jaded not just with the deepening eurozone crisis but with policymakers' ability to tackle the crisis,” Harper said.

Concerns over the eurozone were overshadowing a labour strike by oil workers in Norway, the world's eighth-biggest exporter, which cut output and pushed Brent prices higher over the past two days.

More than 700 oil workers began the strike on Sunday after pension negotiations broke down. - Sapa-AFP

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