Oil prices fall on Libya output prospect

Oil prices tumbled Wednesday on the prospect of higher Libyan output joining ample global supplies and as traders continued to book profits from a sharp rally a week ago.
The latest weekly US petroleum report showed a larger-than-expected decline in crude inventories that nevertheless remained close to record highs.
US benchmark West Texas Intermediate for August slid lower for the fifth straight trading session, losing 86 cents, or 0.8 percent, to close at $104.91 a barrel on the New York Mercantile Exchange.
In London, Brent North Sea crude for delivery in August shed $1.05 (0.9 percent) at $111.24 a barrel, its lowest close since June 11.
"The Brent crude oil market is the weakest segment of the wider petroleum complex on Wednesday as Libya looks set to reopen two oil export terminals sooner rather than later," said Tim Evans of Citi Futures.
Libyan production has been severely limited for a year due to unrest, and currently stands at about 320,000 barrels per day. Normally, the north African country produces 1.5 million bpd.
"We still see plenty of geopolitical uncertainty -- there may not be that much oil flowing from Libya right away, Iraq still faces considerable political and military challenges, Ukraine and Russia are still at odds -- but current oil supplies do look comfortable."
Gene McGillian of Tradition Energy said that traders continued to take profits, adding that "the market has been getting overly long."
McGillian said the US Department of Energy's report Wednesday of a drop of 3.2 million barrels in commercial crude inventories last week, almost twice the amount estimated, still left supplies within five percent of a record high.
"The fundamentals are remaining kind of loose" in the world's biggest crude consumer, he said.
Meanwhile, Tropical Storm Arthur gathered strength off the US southeastern coast ahead of the long Independence Day holiday weekend and was predicted to become a hurricane in the coming days.
But traders were expecting only a marginal impact on gasoline demand and oil prices.
"I don't think it's going to be a major event," McGillian said.