Global crude oil prices have fallen in thin pre-holiday trading, with prices under pressure from prospects of healthy US supplies and the resumption of Libyan oil exports.
New York’s main contract, West Texas Intermediate (WTI) for delivery in February, closed the final trading session of the year on Tuesday at $US98.42 a barrel, down 87 US cents from Monday.
The European benchmark, Brent North Sea crude for February, dropped 41 US cents to $US110.80 a barrel in London trade.
Trading volumes were light ahead of the market holiday on Wednesday in observance of New Year’s Day, with crude oil traders “noting the resumption of some minor volumes of Libyan oil production”, said Timothy Evans of Citi Futures.
According to a spokesman for Libya’s National Oil Corporation (NOC), the Sarir and Msala oilfields resumed production on Sunday.
Oil production in the North African nation has been affected since July when armed protesters demanding regional autonomy blockaded the main oil facilities in the east.
Libyan oil output has plunged to about 250,000 barrels per day from nearly 1.5 million bpd normally.
For Phil Flynn of Price Futures Group, the WTI price dip was expected after the futures contract closed above the $US100 threshold on Friday.
“We really made an historic year for the oil market in the United States, with supply at a record high for this time of year,” he said.
The US this year has been pumping out increasing amounts of crude oil. In November, US production reached eight million barrels per day on average, the largest output since late 1988.
The market is adjusting to this reality heading into the new year, he said, adding “the US market is going to be better supplied than it has ever been”.
Traders were awaiting the latest report on US oil supplies from the American Petroleum Institute later on Tuesday. The US Department of Energy’s weekly petroleum report, normally released on Wednesdays, was postponed to Friday.
According to analysts polled by Dow Jones Newswire, the average forecast is that crude oil supplies fell by 2.2 million barrels last week.
