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Oil prices drop as Libyan supplies to return

Oil extended losses on Thursday on prospects that Libya will begin exporting more crude and as concerns eased about the Iraqi crisis.

NEW YORK: Oil extended losses on Thursday on prospects that Libya will begin exporting more crude and as concerns eased about the Iraqi crisis.

US benchmark West Texas Intermediate for August fell 42 cents to finish at $104.06 a barrel, its sixth consecutive session of losses.

Brent North Sea crude for delivery in August dropped 24 cents to $111.00 a barrel in London trade.

Prices dropped after Libya's interim Prime Minister Abdullah al-Thani on Wednesday declared that authorities had regained control of export terminals blockaded by rebels.

Crude was down "due to the relatively quiet situation in Iraq and the Libyan port deal, both of which kept supplies up," said analyst Sanjeev Gupta at consultancy EY.

Libyan production has been severely limited for a year after rebels last summer blockaded terminals as part of a campaign to restore autonomy in the country's eastern region.

Its output currently stands at some 320,000 barrels per day, about a fifth of its normal output.

Rebel leader Ibrahim Jodhran said lifting of the blockade on the Ras Lanuf and Al-Sidra terminals was in line with an April deal with Tripoli, and a sign of goodwill toward the new parliament elected last week.

The reopening of the two terminals will "add 500,000 barrels of crude per day into the global energy market," EY analyst Gupta said.

Meanwhile, concerns over a possible supply disruption due to Iraq's security crisis have eased, analysts said. So far the swift Islamist militant offensive that has overtaken large parts of Iraq has not directly threatened the key oil-producing region in the country's south.

Traders kept an eye on Hurricane Arthur as it headed toward the US East Coast. Analysts expect the storm will weigh on gasoline demand as millions curtail driving over the long Independence Day holiday weekend that officially begins Friday.

"Gas demand destruction will be in its wake," said Phil Flynn of Price Futures Group.

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