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Crude oil dips on speculation IEA to release more supply

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Forexpros - Crude oil futures dipped on Thursday, declining for the first time in three days amid speculation the International Energy Agency planned to release more oil from strategic reserves, while a weaker U.S. dollar capped losses.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at USD94.53 a barrel during European morning trade, shedding 0.6%.

It earlier fell as much as 0.72% to hit a daily low of USD94.41 a barrel.

IEA Deputy Executive Director Richard Jones said at an industry conference in Mexico City on Wednesday that the agency may decide to release additional oil stockpiles by mid-July to offset a drop in global supplies due to the ongoing conflict in Libya.

"It will be up to our member countries, they could decide to continue it for a month or two," Mr. Jones said, while adding that a decision on whether to extend the release could be made "around the third week of July".

Crude prices have erased the sharp losses suffered in the wake of last Thursday's IEA announcement that it would release of 60 million barrels of oil from emergency reserves.

Meanwhile, a weaker dollar supported prices. The dollar index, which measures the greenback against a basket of major currencies, was down 0.4% to trade at 74.71, hovering close to a three-week low.

On Wednesday, crude prices jumped to a one-week high as risk aversion eased after Greece's parliament approved a critical austerity plan deemed necessary to avoid a sovereign debt default.

Also Wednesday, official data showed that U.S. crude oil inventories declined by 4.4 million barrels last week, nearly tripling expectations for a 1.5 million barrel decline.

Total motor gasoline inventories unexpectedly declined by 1.4 million barrels, confounding expectations for a 0.8 million barrel increase.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery slumped 0.75% to trade at USD111.65 a barrel, up USD17.12 on its U.S. counterpart.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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