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Oil extends losses despite IEA warning of spare capacity limits

Reuters  |  NEW YORK 

By Jessica Resnick-Ault

NEW YORK (Reuters) - fell on Thursday, extending the previous session's sharp losses as Libyan exports resumed, despite the International Energy Agency's (IEA) warning that the world's "might be stretched to the limit" due to production losses.

Brent fell 30 cents a barrel to $73.10 a barrel by 11:24 a.m. EDT (1524 GMT), after earlier trading at a session low of $72.67. On Wednesday, the global benchmark had slumped $5.46, or 6.9 percent, its biggest one-day fall in two years

U.S. crude fell 88 cents to $69.50 a barrel, after losing 5 percent the previous session.

Early in the session, both benchmarks pushed briefly higher on U.S. Trump's comments that his administration would try to negotiate a fair trade deal with

"The market was still nervous," said Phil Flynn, an at group in After U.S. crude briefly traded above $71 a barrel, traders exited positions, leading the market lower to test below $70 a barrel, he said.

The market continued in the grips of bearish supply

The announcement that Libya's (NOC) would reopen four oil export terminals, ending a standoff that had shut down most of Libya's oil output, was a key catalyst for a dramatic sell-off on Wednesday, analysts said.

The reopening will allow the return of up to 850,000 bpd of high-quality crude to international markets.

Two Libyan oilfields will reopen, NOC and industry sources said on Thursday, easing supply concerns that have boosted the market.

Focusing on bearish factors, the market shrugged off warnings from the IEA that there is potentially a spare capacity crunch.

"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 agency said in its monthly report.

"This vulnerability currently underpins and seems likely to continue doing so," the IEA added.

The market also brushed off bullish data from information provider Genscape, which reported that inventories at the Cushing, delivery hub had fallen 929,399 barrels per day from July 6 to July 10, traders said.

Supply to the U.S. market, particularly Cushing, has also been squeezed by the loss of some Canadian

(Reporting by in Tokyo and Christopher Johnson in London; Editing by and Dale Hudson)

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

First Published: Thu, July 12 2018. 21:04 IST