By David Hodari
Oil prices settled near flat on Thursday, wavering between gains and losses throughout the day as traders gauged supply signals.
Light, sweet crude for August delivery fell 5 cents, or 0.1%, to $70.33 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, increased 1.4% to $74.45.
Prices for Brent and WTI had risen earlier in the day, but participants returned to largely ignoring a U.S. Energy Information Administration market report Wednesday that showed a sharp fall in U.S. crude supplies.
On Wednesday, crude prices tumbled amid concern over resurgent Libyan supply and the U.S.-China trade dispute. Brent sank 6.9%, its biggest drop since February 2016, while WTI plunged 5% for its worst retreat in more than a year.
Libya's state-run National Oil Corp. lifted the force majeure on eastern oil ports that had kept the country's crude off global markets amid continued civil war. Analysts estimated that those ports could contribute approximately 700,000 barrels of oil a day to the global market.
"When you get a market move and poor liquidity, it snowballs and you get declines of greater magnitude," said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas.
The tumble in prices follows a period during which the oil market had posted a dramatic rally on worries of a supply shortage. Earlier this week, both Brent and WTI had traded near multiyear highs.
Some analysts question how long it will take for that Libyan oil to get to markets. Commerzbank said in a note that it is unclear how much damage has been sustained in the reclaimed oil ports following fighting last month.
The cocktail of bearish factors on Wednesday prompted investors to ignore what strategists at ING referred to as bullish market reports from both the U.S. Energy Information Administration on Wednesday and the American Petroleum Institute on Tuesday.
The EIA's report revealed that U.S. crude inventories fell by 12.63 million barrels over the past week -- a significant increase on the API's own report of 6.8 million barrels the previous day.
The global oil-market supply backdrop also remains constructive, analysts said, with Brent prices having flirted with three-year highs earlier in the week amid a spate of global supply issues.
While the Libyan supply squeeze had been among the largest price drivers, supply problems in Canada, strikes in Norway and expectations of dropping exports from Venezuela and sanction-hit Iran also have boosted prices in recent weeks.
That said, the Organization of the Petroleum Exporting Countries released its first 2019 production forecasts Wednesday, in which it estimated an increase in non-OPEC supply of 2.1 million barrels a day. On the strength of that report, "the oil market would be sufficiently supplied next year," Commerzbank said in its research note.
The International Energy Agency released its oil-market report Thursday, warning that recent outages could stretch the world's spare capacity cushion and hinted that it would be ready to access emergency supplies if needed.
Gasoline futures rose 0.5% to $2.0717 a gallon and diesel futures rose 1.1% to $2.1231 a gallon.
--Sarah McFarlane and Stephanie Yang contributed to this article.
Write to David Hodari at [email protected]