Crude below US$97 as Libya plans to reopen terminals, Fed meeting approaches

Pablo Gorondi, The Associated Press 0

The price of oil slid below US$97 a barrel Friday on the possibility of new supplies from Libya and expectations the U.S. Federal Reserve will cut its stimulus program.

Benchmark West Texas Intermediate crude for January delivery dropped 90 cents to US$96.60 a barrel on the New York Mercantile Exchange. For the week, oil was down US$1.05 a barrel.

The Libyan militia that shut down most of the country’s oil terminals for months has said the terminals will reopen Dec. 15. Libya has been losing millions of dollars every day after production dropped from 1.4 billion barrels a day to around 250,000 barrel since the closure.

Libya has said it hopes to increase output to two million barrels a day once unrest ebbs. OPEC members may have to reduce their production to keep prices from dropping sharply and hurting oil revenues that underpin their economies.

Oil prices were also under pressure from expectations that the Fed could decide next week to reduce its US$85 billion monthly bond purchases meant to stimulate the economy.

Oil prices have generally benefited from the stimulus, which has helped keep the dollar relatively weak, making crude cheaper for investors using other currencies. Commodities like oil have also attracted traders looking for higher returns than those of low-yielding bonds.

Brent crude, a benchmark for international oils, fell six cents to US$108.32 a barrel on the ICE exchange in London.

In other energy futures trading on the Nymex, wholesale gasoline was flat at US$2.63 a U.S. gallon (3.79 litres), heating oil was little changed at US$2.97 gallon and natural gas rose five cents to US$4.40 per 1,000 cubic feet.

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