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Oil steadies despite IEA warning of spare capacity limits

Reuters  |  NEW YORK 

By Jessica Resnick-Ault

NEW YORK (Reuters) - steadied on Thursday, after the International Energy Agency's (IEA) warned that the world's "might be stretched to the limit" due to production losses in several different countries.

Brent gained 59 cents a barrel to trade at $74 by 1:44 p.m. EDT (1746 GMT), 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. crude fell 41 cents to $69.97 a barrel, after losing 5 percent the previous session.

The market largely shrugged off warnings from the IEA that there a potential spare capacity crunch looms.

"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.

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

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

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.

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.

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

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

The pullback has not yet derailed the possibility that Brent will 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, there is less of a chance that the market will recover as quickly, he said.

(Reporting by in Tokyo and Christopher Johnson in London; Editing by and Alistair Bell)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, July 12 2018. 23:28 IST