Oil prices headed south on Wednesday and WTI prices have been pinned to new lows after knocking into the 70.00 major handle.
Libya's national oil production fell to 527,000 barrels per day from a high of 1.28 million bpd in February following recent oil port closures, the head of the National Oil Corporation said in a statement on Monday.
Adding to the bearish mood were signs of a possible relaxation of US sanctions on Iranian crude exports. China is a top buyer of USA crude, and has said it could tax US oil if trade tensions escalate.
Worldwide benchmark Brent crude traded at around $74.57 on Thursday morning, up around 1.6 percent, while U.S. West Texas Intermediate (WTI) stood at $70.65, up nearly 0.4 percent. "That's while Saudi Arabia told OPEC it pumped about 10.5 million barrels of crude a day last month as the kingdom sought to cap rallying prices by ramping up output, according to people familiar with the matter", writes Bloomberg.
Iran has already seen its shipments to Europe fall nearly 50 percent as USA penalties deter buyers, and the country's total exports could slump even more, according to the agency, which advises most of the world's major economies.
The IEA report showed further signs that prices are taking a toll, with global demand growth slowing in the second quarter to just 900,000 barrels a day.
"Libyan relief changes the conversation about spare capacity", said John Kilduff, a partner at Again Capital Management. "This will become an even bigger issue as rising production from Middle East Gulf countries and Russian Federation, 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 organization said Thursday.
The price of USA crude oil is rallying after Wednesday's sharp fall prompted by news that Libya's National Oil Corporation is reopening four oil export terminals.
Washington had previously said countries must halt all imports of Iranian oil from November 4 or face USA financial restrictions, with no exemptions.
In other news, the U.S. Energy Information Administration said on Wednesday that U.S. crude stockpiles fell by 12.6 million barrels during the week-ending July 6. Higher gas prices can leave USA households with less money to spend on other products. "Our markets remain open while we work directly with customers to resolve the issue", a CME spokesman said in an emailed statement.