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Oil edges lower, set for big weekly decline

Reuters  |  TOKYO 

By Aaron Sheldrick

(Reuters) - prices edged lower on Friday and were set for a second weekly fall, as the market shrugged off a warning that spare capacity may be stretched as OPEC and increase production.

Brent crude eased 36 cents, or 0.5 percent, to $74.09 by 0326 GMT. On Thursday it gained $1.05 a barrel, rebounding from a session low of $72.67. It is heading for a weekly fall of nearly 4 percent.

U.S. crude dipped 4 cents to $70.29, after a five cent decline in the previous session. It is heading for a weekly decline of nearly 5 percent.

It has been a wild week for prices with both the main benchmarks suffering heavy losses on Wednesday as traders focused on the return of Libyan to the market amid concerns about a China-U.S. trade war.

However, a warning on spare capacity by the (IEA) pushed Brent higher on Thursday, helping it recoup some losses.

"It is a tough market," said Tony Nunan, at in "I think it is supported by relatively strong demand and inventories are falling, but if you look a little bit ahead U.S. just continues to grow and then it depends on what goes on with OPEC."

The Organization of the Petroleum Exporting Countries (OPEC) and other key producers including have responded to the recent market tightness by easing a supply-cut agreement.

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

"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.

China's fell for a second month in a row in June as shrinking margins and led some independent refiners, known as "teapots", to scale back purchases, official data showed on Friday.

(Reporting by Aaron Sheldrick; editing by Richard Pullin)

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

First Published: Fri, July 13 2018. 09:07 IST