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Brent oil rises on concerns about spare capacity

Reuters  |  NEW YORK 

By Jessica Resnick-Ault

NEW YORK (Reuters) - Brent strengthened late on Thursday, recouping some of its losses from the previous session, as market focus returned to concerns about spare capacity following a warning from the Agency (IEA).

Brent oil gained $1.05 a barrel to settle at $74.45, rebounding from a session low of $72.67. On Wednesday, the global benchmark slumped $5.46, or 6.9 percent, its biggest one-day fall in two years.

U.S. settled down 5 cents at $70.33 a barrel, after losing 5 percent the previous session.

The IEA cautioned the world's "might be stretched to the limit" due to production losses in several different countries.

Ongoing concerns about supply disruptions from OPEC member drove crude higher, said John Kilduff, a at Management.

"Production issues there today were a reminder that those issues are ongoing," he said.

Several countries have seen their output fall in recent weeks, including Venezuela, Norway, and

"Rising production from countries and Russia, welcome though it is, comes at the expense of the world's spare capacity cushion, which might be stretched to the limit," the Paris-based IEA said in its monthly report.

"This vulnerability currently underpins and seems likely to continue doing so," the agency said.

At the same time, the U.S. has ramped up its rhetoric on sanctions against OPEC member Iran, contributing to rising prices, Kilduff said.

Wednesday's sharp selloff was galvanized by worries over rising trade tensions between the and and that had brought some production back online. The declines have not spurred buyers to return yet, after traders sold speculative positions on Wednesday.

said it would reopen four oil export terminals, ending a standoff that had shut down most of Libya's oil output; the reopening will bring back up to 850,000 barrels per day of crude production.

The market also expects stockpiles at the U.S. to fall, traders said, citing information provider Genscape. Supply to the U.S. market has also been squeezed by the loss of some Canadian

Brent still may recover to above $80 a barrel by the end of the year, said Brian LaRose, a at ICAP-TA. If Brent pulls to below $70 a barrel, that reduces the possibility the market will recover as quickly, he said.

(Reporting by in Tokyo and Christopher Johnson in London; Editing by and Chris Reese)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, July 13 2018. 06:40 IST
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