* Libya restarts 340,000 bpd El Sharara oilfield
* Speculative length coming out of the market
* U.S. crude stocks up 447,000 barrels at Cushing
(New throughout, updates prices and market activity to
By Anna Louie Sussman
NEW YORK, July 9 Oil prices fell on Wednesday,
with U.S. crude down more than $1 a barrel on faltering demand
for gasoline, and Brent down too as a Libyan oilfield resumed
U.S. gasoline stockpiles rose 579,000 barrels,
the Energy Information Administration reported, surprising
analysts polled by Reuters who had expected a 217,000-barrel
"Gasoline demand didn't grow as expected and that
disappointment is showing in the negative reaction," said Phil
Flynn, analyst at Price Futures Group in Chicago, Illinois.
RBOB gasoline futures fell by more than 1 percent to
$2.937 per gallon, down 3.5 cents.
Libya has restarted the 340,000-barrel-per-day (bpd) El
Sharara field after protesters ended a four-month strike, which
could double the country's current crude output.
The government has also taken back control of the Ras Lanuf
and Es Sider oil ports, ending an almost year-long occupation
that reduced Libya's output to less than a quarter of the 1.4
million bpd it was pumping before protests began last summer.
Brent crude futures fell by 66 cents to settle at
$108.28 a barrel. Brent hit a one-month low of $108.14 during
the session, its eighth straight decline, the longest such
streak since May 2010.
The August Brent contract was trading at a discount of about
19 cents to the September contract.
U.S. crude lost $1.11 to settle at $102.29 after
falling as low as $102.00. The U.S. benchmark has fallen in nine
straight sessions, its longest such streak since December 2009.
As speculators dumped Brent, its premium over U.S. crude
CL-LCO1=R touched its narrowest point in almost a month at
$5.15, then widened to settle at $5.85
RISK PREMIUM SHRINKS
In June, Brent hit a 9-month high of $115.71 as fund
managers and traders rushed to buy Brent when Islamic militants
rampaged across Iraq. But many are taking profits now that the
violence has had a limited impact on Iraq's crude exports.
At the same time, demand for crude has been low from
European refiners whose margins have been squeezed by an influx
of diesel from the United States, Russia and Asia.
Many refiners have slashed run rates or
undertaken extensive maintenance at the height of summer season.
"European refiners are having a bit of a tough time. There's
a lot of product coming from the (United) States into Europe,
which has depressed refining margins, and that's probably one of
the reasons why crude is weak," said Christopher Bellew, a
broker at Jefferies Bache in London.
(Additional reporting by Claire Milhench and Florence Tan in
London, and Theodora D'Cruz in Singapore, Rowena Caine in London
and Lorenzo Ligato in New York; Editing by David Goodman, David
Evans and Bernadette Baum)