Oil fell towards $111 a barrel on Wednesday, its lowest in almost three weeks, on a possible substantial recovery in Libyan exports after rebels said they would reopen two oil terminals.
Libyan rebels blockading eastern oil ports have agreed to reopen the remaining two terminals at Es Sider and Ras Lanuf. The port seizures have crippled Libya's oil industry since last summer.
If fulfilled, the deal would bring back around 500,000 barrels per day (bpd) of crude oil export capacity, although production would remain well below the total of around 1.4 million barrels per day.
There have been repeated reports in the past that ports would re-open and production increase, but analysts said that the latest developments were likely to have more impact.
"This time it seems credible," Carsten Fritsch told Reuters Global Oil Forum.
Brentwas down 71 cents a barrel at $111.58 by 1152 GMT. U.S. light crude oil fell 43 cents to $104.91. It was at its lowest since June 12, and down 1.5 so far this week on track for its biggest weekly fall since March.
The North Sea crude oil benchmark hit a nine-month intraday high of $115.71 two weeks ago on worries that a Sunni Islamist insurgency in northern Iraq would hit oil output and exports.
But prices have slipped back steadily since then as the oil facilities, mostly in southern Iraq, hundreds of miles from the fighting, have continued in operation. Iraq is OPEC's second biggest producer and exporter and pumped 3 million barrels per day (bpd) last month, a Reuters survey showed.
Analysts have even suggested that Iraq's southern oil exports, which recently hit a record high around 2.6 million barrels per day (bpd), could increase further.
"There haven't been many reported attacks in the south over the past few months," said Jessica Watkins, Middle East analyst at the Risk Advisory Group in London.
"I don't think there's much of an imminent risk of (Sunni insurgents) seizing key installations," she added.
Oil producers would struggle to cover another big oil supply outage, industry officials say, increasing the chance governments may tap strategic reserves if Iraq's southern exports were disrupted.
U.S. crude stocks fell by 876,000 barrels in the week to June 27 to 381.7 million, compared with expectations for a decrease of 2.2 million barrels, data from industry group the American Petroleum Institute showed on Tuesday.
Gasoline stocks dropped by 407,000 barrels versus forecasts of a 400,000-barrel gain. Distillate fuels stockpiles, which include diesel and heating oil, rose by 4.4 million barrels, against expectations of a 800,000-barrel gain, it said.
Investors are awaiting official data from the Energy Information Administration (EIA) due on Wednesday.
Source: Reuters
Libyan rebels blockading eastern oil ports have agreed to reopen the remaining two terminals at Es Sider and Ras Lanuf. The port seizures have crippled Libya's oil industry since last summer.
If fulfilled, the deal would bring back around 500,000 barrels per day (bpd) of crude oil export capacity, although production would remain well below the total of around 1.4 million barrels per day.
There have been repeated reports in the past that ports would re-open and production increase, but analysts said that the latest developments were likely to have more impact.
"This time it seems credible," Carsten Fritsch told Reuters Global Oil Forum.
Brent
The North Sea crude oil benchmark hit a nine-month intraday high of $115.71 two weeks ago on worries that a Sunni Islamist insurgency in northern Iraq would hit oil output and exports.
But prices have slipped back steadily since then as the oil facilities, mostly in southern Iraq, hundreds of miles from the fighting, have continued in operation. Iraq is OPEC's second biggest producer and exporter and pumped 3 million barrels per day (bpd) last month, a Reuters survey showed.
Analysts have even suggested that Iraq's southern oil exports, which recently hit a record high around 2.6 million barrels per day (bpd), could increase further.
"There haven't been many reported attacks in the south over the past few months," said Jessica Watkins, Middle East analyst at the Risk Advisory Group in London.
"I don't think there's much of an imminent risk of (Sunni insurgents) seizing key installations," she added.
Oil producers would struggle to cover another big oil supply outage, industry officials say, increasing the chance governments may tap strategic reserves if Iraq's southern exports were disrupted.
U.S. crude stocks fell by 876,000 barrels in the week to June 27 to 381.7 million, compared with expectations for a decrease of 2.2 million barrels, data from industry group the American Petroleum Institute showed on Tuesday.
Gasoline stocks dropped by 407,000 barrels versus forecasts of a 400,000-barrel gain. Distillate fuels stockpiles, which include diesel and heating oil, rose by 4.4 million barrels, against expectations of a 800,000-barrel gain, it said.
Investors are awaiting official data from the Energy Information Administration (EIA) due on Wednesday.
