-- API shows crude, distillate stocks rise, gasoline stocks fall

-- Ukraine halted oil flows to Europe over payment issue

Oil prices edged lower on Wednesday, after industry data showed US crude inventories unexpectedly rose last week, signaling a potential hiccup in demand.

US crude stocks rose by about 2.2 million barrels for the week ended August 5, according to market sources citing American Petroleum Institute figures. Analysts had forecast a small 400,000-barrel drop in crude inventories.

Official government data is due on Wednesday at 10:30 am EDT.

Brent crude futures fell 6 cents to $96.25 a barrel by 0002 GMT. US West Texas Intermediate crude futures declined 16 cents to $90.34 a barrel.

On Tuesday, oil prices settled slightly lower after a choppy trading session that saw investors weigh recessionary concerns with news that some oil exports had been suspended on the Russia-to-Europe Druzhba pipeline that transits Ukraine.

Ukraine halted oil flows on the Druzhba oil pipeline to parts of central Europe because Western sanctions had prevented a payment from Moscow for transit fees from going through.

Flows along the southern route of the Druzhba pipeline have been affected while the northern route serving Poland and Germany was uninterrupted.

The Czech Republic's pipeline company MERO said it expected Russian oil supplies through the Druzhba pipeline to the Czech Republic to restart within several days.

Though concerns over a potential global recession have weighed on oil futures recently, US oil refiners and pipeline operators expect energy consumption to be strong for the second half of 2022, according to a Reuters review of company earnings calls.