SINGAPORE, Sept 26 Reuters Oil prices slumped on Thursday, reversing earlier gains, on news Saudi Arabia, the world39;s biggest crude exporter, will give up on its price target in preparation for raising output.

Brent crude futures were down 1.89, or 2.57, to 71.57 a barrel, while U.S. West Texas Intermediate crude fell 1.83 cents, or 2.63, to 67.86 per barrel as of 0740 GMT.

Saudi Arabia is preparing to abandon its unofficial price target of 100 a barrel for crude as it prepares to increase output, the Financial Times reported on Thursday, citing people familiar with the matter.

The news overnight of a potential return of Libyan supply, coupled with todays announcement of a lowered Saudi price target due to an expected increase in supply, has taken the wind out of the crude oil market39;s sails following the boost provided by the PBOC39;s easing measures announced earlier this week, said Tony Sycamore, market analyst at IG.

A United Nations statement on Wednesday said delegates from divided Libya39;s east and west agreed on the process of appointing a central bank governor, a step which could help resolve the crisis over control of the country39;s oil revenue that has disrupted exports.

Any revival in Libyan production would return to a market that is already beset by concerns of weak demand in the U.S. and China, ANZ Research said in a note.

Meanwhile, Deputy Energy Minister Pavel Sorokin on Thursday said Russia does not want to flood the market with oil if…