Libyan disruption cuts 850,000 bpd of oil from market; Canada outage drains U.S. crude, product inventories.
Oil prices rose on Tuesday after Libya declared force majeure on some of its crude exports, while the loss of Canadian supplies helped lift U.S. crude to 3-1/2-year highs.
U.S. light crude jumped 99 cents, or 1.3 percent, to $74.93 a barrel, its highest since November 2014, before easing back to $74.79, up 85 cents, by 1120 GMT.
Benchmark Brent crude oil was up 70 cents at $78.00.
Production at Syncrude Canada's 360,000 barrels per day (bpd) oil sands facility near Fort McMurray, Alberta, was hit by a power outage last month and is likely to remain offline through July, helping drain U.S. inventories.
A Reuters survey estimated U.S. crude oil stockpiles fell for a fourth consecutive week, by about 3.3 million barrels, in the week ended June 29.
Stocks of gasoline and middle distillates such as heating oil and diesel fuel also drew, the survey showed.
The American Petroleum Institute will report estimates for U.S. inventories at 4:30 p.m. EDT (2030 GMT) on Tuesday.
Libya's National Oil Corp declared
force majeure on loadings from Zueitina and Hariga ports on Monday, resulting in 850,000 bpd of supplies being disrupted.
"The (oil) complex is regaining lost ground this morning," Tamas Varga, analyst at London brokerage PVM Oil Associates said. "The Libyan force majeure on oil loadings from the country's eastern ports certainly helps."
Hussein Sayed, market strategist at brokerage FXTM, agreed:
"Oil bulls seem to have returned after Libya suspended oil exports from
two key ports," Sayed said.
Morgan Stanley on Tuesday raised its forecast for Brent in the second half of this year by $7.50 a barrel to $85 as it cut projections for supply from Iran, Angola and Libya.
The UAE's Abu Dhabi National Oil Co (ADNOC) said on Tuesday it could increase production by several hundred thousand bpd if needed.
Oil prices have been buoyed by tightening supplies this year but there are signs demand may now be easing.
In Asia, the world's top oil consuming region, seaborne oil imports have been falling since May, as higher costs turned off consumers and as the escalating trade dispute between the United States and China started to impact the economy.
Chinese stocks fell sharply on Tuesday, with equity markets in Asia near 9-month lows as investors fear that the trade row between China and the United States could derail a rare period of synchronized global growth.
By Christopher Johnson