UPDATE 12-Brent oil rises on concerns about spare capacity


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    * IEA says spare capacity 'could be stretched to the limit'
    * Resumption of Libya oil exports to boost supply
    * U.S.-China trade tensions raise concerns of curbed demand

 (Updates with settlement prices)
    By Jessica Resnick-Ault
    NEW YORK, July 12 (Reuters) - Brent crude 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 International Energy
Agency (IEA).
    Brent crude oil  LCOc1  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. crude  CLc1  settled down 5 cents at $70.33 a barrel,
after losing 5 percent the previous session.
    The IEA cautioned the world's oil supply cushion "might be
stretched to the limit" due to production losses in several
different countries.  urn:newsml:reuters.com:*:nL8N1U81R6
    Ongoing concerns about supply disruptions from OPEC member
Venezuela drove crude higher, said John Kilduff, a partner at
Again Capital 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, Canada and Libya.  
    "Rising production from Middle East Gulf 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 oil prices 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 United States and China and
news that Libya had brought some production back online. The
declines have not spurred buyers to return yet, after traders
sold speculative positions on Wednesday.
    Libya's National Oil Corp 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.  urn:newsml:reuters.com:*:nL8N1U71MS
    The market also expects stockpiles at the U.S. oil delivery
hub to fall, traders said, citing energy information provider
Genscape. Supply to the U.S. market has also been squeezed by
the loss of some Canadian oil production.  urn:newsml:reuters.com:*:nL4N1U54MZ
    Brent still may recover to above $80 a barrel by the end of
the year, said Brian LaRose, a senior technical analyst at
ICAP-TA. If Brent pulls to below $70 a barrel, that reduces the
possibility the market will recover as quickly, he said.

CHART: Brent oil may retest support at $73.37    https://tmsnrt.rs/2NICuFW
CHART: U.S. oil may fall into $67.87-$69.19 range    https://tmsnrt.rs/2NKOPJG
 (Reporting by Aaron Sheldrick in Tokyo and Christopher Johnson
in London; 
Editing by Alistair Bell and Chris Reese)
 ((Jessica.Resnick-Ault@thomsonreuters.com; +1-646-223-6052;
Twitter @JessicaRAult))

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