Oil prices drop on inflation concerns, Brent crude hits $106.96/bbl

Oil prices fell slightly in early Asian trade on Wednesday, pressured by global central bank efforts to tame inflation and ahead of expected builds in US crude inventories as product demand weakens.

Brent LCoc1 crude prices fell 39 cents or 0.5% to $106.96 a barrel by 0045 GMT, while US West Texas Intermediate (WTI) crude CLc1 fell 62 cents to $103.60 per barrel.

US crude stocks rose by about 1.9 million barrels for the week ended July 15, according to market sources citing American Petroleum Institute figures on Tuesday. 

Official weekly crude and fuel inventory data from the US Energy Information Administration (EIA) is expected on Wednesday at 1530 GMT. 

The US 3:2:1 CL321-1=R and gasoline RBc1-CLc1 crack spreads - measures of refining profit margins - both fell to their lowest since April on Tuesday, indicating weaker fuel demand.

Oil prices whipsawed in the previous session, caught in a tug-of-war between supply fears due to Western sanctions on Russia and pressures on indications from central bankers that they will raise interest rates to combat inflation.

On Friday, open interest in New York Mercantile Exchange futures CL-TOT fell to their lowest since September 2015 as investors cut risky assets like commodities, worried that the Federal Reserve will keep raising US interest rates.