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Oil prices slip before US weekly report

Global oil prices fell Wednesday as traders took profits after Brent had struck a 4.5-month peak the previous day and awaited the latest weekly snapshot of US crude inventories.

Brent North Sea crude for delivery in March fell 20 cents to $116.32 a barrel in London midday deals. On Tuesday it reached $117.23 -- the highest level since mid-September, propelled by a series of positive economic indicators.

New York's main contract, light sweet crude for March shed 56 cents to stand at $96.08 a barrel in Wednesday trading.

The market was also pressured by the stronger greenback, which makes dollar-priced crude more expensive for buyers using weaker currencies.

Later on Wednesday, the US government's Energy Information Administration (EIA) will publish its report on American oil stockpiles for the week ending February 1.

"Crude oil stocks retreated on Wednesday, ahead of the release of the weekly EIA oil inventories report, while the strengthening dollar added further pressure and limited risk appetite," said analyst Myrto Sokou at brokers Sucden.

"It seems that the global equity and commodity markets have been 'on standby' ahead of Thursday's European Central Bank meeting," she added.

The weekly EIA report is a key focus for traders because the United States is the top oil consuming nation in the world, followed by number two China.

Analysts meanwhile pointed to a solid result in the Institute for Supply Management's January rating of the US services sector for Tuesday's spike in prices.

Traders also eyed results from a European purchasing managers index, which suggested the continent was poised for a recovery. According to the data firm Markit, the indicator reached its highest level in 10 months.

Capital Economics research house pointed to a "broad-based" recovery in the manufacturing sector worldwide, which is supportive of energy demand.

The forward-looking purchasing managers' indices for Latin America and emerging Asia "have risen rapidly since mid-2012 and the latest figures point to a turnaround in emerging Europe too", it said.