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Crude Oil Prices Settle Lower as Traders Weigh Libyan Output Restart – WTI crude oil prices settled lower Thursday, as traders weighed the impact of increased supply from Libya against expectations that major oil producers may struggle to avert a global supply shortage.

On the New York Mercantile Exchange crude futures for August delivery fell 5 cents to settle at $70.33 a barrel, while on London's Intercontinental Exchange, Brent rose 1.53% to trade at $74.52 a barrel.

Oil prices were on the back foot for most of the session as Libya's National Oil Corp (NOC) said it would reopen four oil export terminals, denting some the supply-risk premium which had underpinned the recent run-up in oil prices.

The International Energy Agency, however, raised expectations for a global shortage in crude supplies as the energy watchdog warned of a potential capacity crunch amid a rise in output from Middle East Gulf countries and Russia.

"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 agency said in its monthly report.

Saudi Arabia increased production by 430,000 barrels a day in June, the IEA said. That, however, was offset somewhat by falling Iranian exports, as European traders trimmed their imports ahead of U.S. sanctions on Tehran, which come into effect in November.

"In June, Iran's crude exports fell back by about 230,000 barrels a day, albeit from a relatively high level in May, as European purchases dropped by nearly 50%," the agency said.

Also stemming losses in oil prices were reports of ongoing declines in inventories at the Cushing, Okla. delivery hub.

Inventories at the Cushing, Okla. delivery hub had fallen 929,399 bpd from July 6 to July 10, Reuters reported, citing traders.

This comes on a day after data showed inventories of U.S. crude fell by 12.633 million barrels for the week ended July 6, confounding expectations for a draw of 4.489 million barrels.

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