FILE PHOTO: A general view of the Centenario deep-water oil platform in the Gulf of Mexico off the coast of Veracruz
By Jessica Resnick-Ault
NEW YORK (Reuters) - Oil prices steadied on Thursday, after the International Energy Agency's (IEA) warned that the world's oil supply cushion "might be stretched to the limit" due to production losses in several different countries.
Brent crude oil gained 59 cents a barrel to trade at $74 by 1:44 p.m. EDT (1746 GMT), rebounding from a session low of $72.67. On Wednesday, the global benchmark slumped $5.46, or 6.9 percent, its biggest one-day fall in two years.
U.S. crude fell 41 cents to $69.97 a barrel, after losing 5 percent the previous session.
The market largely shrugged off warnings from the IEA that there a potential spare capacity crunch looms.
"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.
Several countries have seen their output fall in recent weeks, including Venezuela, long in crisis, Norway, Canada and Libya.
"This vulnerability currently underpins oil prices and seems likely to continue doing so," the IEA added.
Wednesday's sharp selloff was galvanized by worries over rising trade tensions between the United States and China and news that Libya had brought some production back online. The declines have not spurred buyers to return yet, after traders sold speculative positions on Wednesday.
After U.S. crude briefly traded above $71 a barrel, traders exited positions, leading the market lower to test below $70 a barrel, he said.
Libya's National Oil Corp said it would reopen four oil export terminals, ending a standoff that had shut down most of Libya's oil output; the reopening will bring back up to 850,000 barrels per day of crude production.
The market also brushed off bullish data from information provider Genscape, which reported that inventories at the Cushing, Oklahoma, delivery hub had fallen 929,399 barrels from July 6 to July 10, traders said.
Supply to the U.S. market has also been squeezed by the loss of some Canadian oil production.
The pullback has not yet derailed the possibility that Brent will recover to above $80 a barrel by the end of the year, said Brian LaRose, a senior technical analyst at ICAP-TA. If Brent pulls to below $70 a barrel, there is less of a chance that the market will recover as quickly, he said.
(Reporting by Aaron Sheldrick in Tokyo and Christopher Johnson in London; Editing by Marguerita Choy and Alistair Bell)