* Libyan rebels to reopen two oil terminals -spokesman
* Sunnis, Kurds shun Iraq parliament after no Maliki
* Despite Saudi pledge, another big oil outage would strain
* U.S. crude stocks fell by 876,000 barrels vs f'cast 2.2
mln bbl dip -API
By Manash Goswami
SINGAPORE, July 2 Brent futures slipped towards
$112 a barrel on Wednesday as Libyan rebels agreed to reopen two
oil terminals, but lingering worries over the threat of a sudden
worsening in the Iraq crisis stemmed further losses.
The European benchmark dropped for a third day to trade near
its lowest in nearly three weeks, but limited spare production
capacity amid an improving demand outlook in China and the
United States should help underpin prices.
Brent crude had eased 12 cents to $112.17 a barrel
by 0311 GMT, after its lowest settlement since June 11. U.S. oil
added 4 cents to $105.38, after also recording its lowest
ending since June 11.
"We are looking at sideways movement in oil. The situation
in the Middle East won't allow prices to go down," said Tony
Nunan, oil risk manager at Mitsubishi Corp in Tokyo.
"The summer driving season is getting underway in the United
States and China isn't falling off the cliff."
Libyan rebels blockading key eastern oil ports have agreed
to reopen the remaining two terminals at Es Sider and Ras Lanuf.
Since last summer, the port seizures have crippled Libya's oil
If fulfilled, the deal would bring back around 500,000
barrels per day (bpd) of crude oil export capacity.
The overarching supply risks from Iraq and other key
producers such as Nigeria amid a healthier demand picture look
set to place the U.S. benchmark "firmly in the $100 camp", said
Prior to Iraq conflict, Nunan assessed the fair value of the
contract at around the $90-level. Brent is likely to similarly
remain supported, he said.
Sunnis and Kurds walked out of the first session of Iraq's
new parliament after Shi'ites failed to name a prime minister to
replace Nuri al-Maliki, dimming any prospect of an early
national unity government to save Iraq from collapse.
Prices have also been supported on worries of limited spare
capacity to make up for any major loss in shipments. The world's
unused spare oil production capacity would struggle to cover for
another big outage, industry officials and analysts say,
increasing the chance governments may tap strategic reserves
should Iraq's southern exports be disrupted.
U.S. crude stocks fell by 876,000 barrels in the week to
June 27 to 381.7 million, compared with expectations for a
decrease of 2.2 million barrels, data from industry group the
American Petroleum Institute showed on Tuesday.
Gasoline stocks dropped by 407,000 barrels versus forecasts
of a 400,000-barrel gain. Distillate fuels stockpiles, which
include diesel and heating oil, rose by 4.4 million barrels,
against expectations of a 800,000-barrel gain, it said.
Investors are now awaiting official data from the Energy
Information Administration (EIA) due later in the day to gauge
the country's demand outlook.
(Reporting by Manash Goswami; Editing by Joseph Radford)