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Oil drifts lower before weekend

London - Oil prices nudged lower on Friday as traders balanced soft gasoline demand in the United States and plentiful global supplies, against upbeat Chinese manufacturing data and ongoing geopolitical concerns.

Brent North Sea crude for delivery in September dipped two cents to stand at $107.05 per barrel in early afternoon London deals.

US benchmark West Texas Intermediate for September fell nine cents to $101.98 a barrel.

"Despite a draw in the weekly oil inventories, the global supply output still looks healthy enough to maintain southward pressure on prices," said Capital Spreads dealer Jonathan Sudaria.

A report by the US Energy Information Administration said on Wednesday that American crude inventories tumbled by four million barrels in the week ending July 18.

That marked the fourth weekly decline in a row and was far bigger than the 2.5 million-barrel decline forecast by analysts.

However, the report also showed US gasoline inventories rose 3.38 million barrels, even though many Americans are taking to the road for their holidays in the peak-demand driving season.

Rising supplies tend to indicate weak demand in the United States, which is the world's top crude oil consuming nation.

"WTI prices are kept pressured under by gasoline inventories, which expanded for the third straight week despite the ongoing driving season in the US," said CMC Markets analyst Desmond Chua.

"Meanwhile the slide in Brent has been kept in check due to the possibilities of tougher sanctions against Russia, which may spark an oil crunch in Europe," he told AFP.

HSBC bank's preliminary purchasing managers index of Chinese manufacturing activity hit an 18-month high of 52.0 in July, a further sign the world's second-largest economy is gaining momentum.

China is the world's top energy consuming nation.

The oil market experienced choppy trade this week as traders took their cue from geopolitical tensions affecting key crude producing regions Russia and the Middle East.

Investors are keeping an eye on events in eastern Europe as the US and its allies plan another round of sanctions on Russia for its support of rebels accused of shooting down a Malaysia Airlines airliner in a disaster which killed 298 people last week.

Brent prices briefly topped $108 on Thursday as traders fretted over the possibility of new sanctions against key oil producer Russia.

While tensions have eased over the past week since the rebels handed over the plane's black boxes, Washington is still pressing ahead with stiffer measures against Moscow.

However, Ukraine is a major conduit for Russian natural gas exports to Europe, and there are concerns the sanctions could disrupt supplies.

An EU source said on Thursday that the European Union would add to its sanctions list 15 Ukrainian and Russian individuals and 18 entities over their role in the Ukraine crisis.

Traders also kept a close eye this week over the Israeli ground and air assault against Hamas militants in Gaza, which has heightened tensions in the oil-rich Middle East region.

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