Crude undermined by easing Libya, Iraq supply fears

Construction workers specializing in pipe-laying work on a section of pipeline outside Watford City, N.D.
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Brent crude slid more than $1 a barrel on Tuesday, its seventh straight decline, with U.S. oil also falling as Libyan oil exports looked likely to rise, and fears eased over a supply disruption in Iraq.

Brent has shed more than 5 percent since last month, when the Iraq crisis drove prices to a nine-month high of $115.71. Brent's premium over U.S. crude slid below $6 for the first time since mid-June.

Libya's 340,000 barrel per day (bpd) El Sharara oilfield has resumed operations after a four-month strike, a spokesman for state-run National Oil Corp (NOC) said. This may free more oil for export after last week's port deal with rebels.

for August delivery tumbled under $110 a barrel, down by $1 and at its lowest in a month. U.S. crude edged down 13 cents to settle at $103.40, its eighth consecutive session of declines the longest decline since 2009.

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In Iraq, Investors now see less risk that Islamist militants could advance beyond the edge of Baghdad and disrupt oil flow in the country's south, which accounts for the bulk of Iraq's output and exports. Still, Iraq remained in political limbo as its new parliament put off its next session for five weeks.

In Libya, preparations are under way to reopen two major oil ports in the east that were shut by protests almost a year ago. The Ras Lanuf and Es Sider ports make up more than a third of the OPEC producer's export capacity. Any additional Libyan barrels that may emerge would be regarded as a negative for Brent, which is a light crude of similar quality to Libyan oil and competes in similar markets, BNP Paribas analysts said in a note.

Investors are also awaiting weekly oil inventory data from the United States due later on Tuesday and Wednesday for clues on the demand outlook in the world's largest oil consumer. U.S. commercial crude inventories were forecast to have dropped in the week to July 4, a preliminary Reuters survey of five analysts showed. Distillate stockpiles were expected to have risen and gasoline inventories to be unchanged.

--By Reuters. For more information on commodities, please click here.