* Libyan output, exports continue to recover
* Conflict and unrest remain a risk to oil supply
* Coming up: weekly government data on U.S. inventories
(Updates with API inventories)
By Anna Louie Sussman
NEW YORK, Aug 19 U.S. crude oil dropped nearly
$2 on Tuesday, falling for a second straight day as a rush of
selling ahead of the session close brought the contract to its
lowest price since January.
U.S. front-month September crude fell sharply a day ahead of
its contract expiration, hitting a session low of $94.27, its
lowest in seven months, before paring losses to close at $94.48
a barrel, down $1.93.
"There were physical sellers into the close, and not enough
buyers. It was pure fundamentals on the trading," said Bill
Baruch, senior market strategist at iitrader.com in Chicago.
U.S. October crude fell by 89 cents to settle at
Brent crude edged lower, notching a fresh 14-month low
during Tuesday's session as the prospect of increased Iraqi and
Libyan oil supplies weighed on the market.
Brent crude oil for delivery in October fell 4 cents
to settle at $101.56 a barrel, after falling to $101.07, the
lowest since June 2013, the same month Brent prices were last
below $100 a barrel.
Several analysts said Brent was testing support around $101,
noting the proximity of Tuesday's low to Monday's low of
U.S. RBOB gasoline futures rose by more than 1
percent, after a report by industry intelligence company
Genscape of decreased activity in a crude unit at Irving Oil
Ltd's 300,0000-barrel-per-day refinery in St. John, New
PBF Energy Inc also reported flaring at its Delaware
City, Delaware, refinery due to an external power disturbance.
Russia's Lukoil said on Tuesday it had shipped 1
million barrels of oil produced from southern Iraq's giant West
Qurna-2 oilfield, its first shipment from the field, despite a
surge of violence in Iraq.
Libya also was due on Tuesday to start loading its first
crude oil tanker in a year from Es Sider port, and Libya's
National Oil Corp said the country's oil production had risen to
562,000 bpd, up from 535,000 bpd last weekend.
Delegates from the Organization of the Petroleum Exporting
Countries said the group is not worried about a slide in oil
prices towards $100 a barrel, with current levels seen as
acceptable for producers while higher seasonal demand in the
coming weeks was expected to support the market.
Threats to supply remain however, as Iraqi forces halted
their offensive to recapture Tikrit because of resistance from
Islamic state fighters.
"There is still political risk out there, and certainly the
Brent contract is vulnerable to that much more so than the U.S.
crude contract," said Stephen Schork, editor of The Schork
Report in Villanova, Pennsylvania.
British inflation eased more than expected in July after
hitting a five-month high in June and U.S. housing starts
rebounded strongly in July, while only a moderate increase in
U.S. consumer prices suggested the Federal Reserve has room to
keep interest rates low.
U.S. crude oil and refined product stockpiles were forecast
to have fallen in the week to Aug. 15, a preliminary Reuters
survey of analysts showed.
U.S. crude oil and product stockpiles fell last week, data
from industry group the American Petroleum Institute showed on
Crude inventories fell by 1.4 million barrels in the week to
Aug. 15 to 362.8 million, compared with analysts' expectations
for a decrease of 1.2 million barrels. U.S. crude futures fell
about 20 cents on the report's release, before paring losses.
Crude stocks at the Cushing, Oklahoma, delivery hub rose by
1.7 million barrels, API said.
The U.S. Energy Information Administration report is due at
10:30 a.m. EDT (1430 GMT) on Wednesday.
(Additional reporting by Robert Gibbons in New York, Henning
Gloystein and Alex Lawler in London and Jacob Pedersen in
Singapore; Editing by Alden Bentley, Paul Simao, Chris Reese and