Oil Declines in Thin, Volatile Trading
Global benchmark Brent crude oil closed down nearly a dollar a barrel Friday after a day of choppy trading despite expectations of new investments in the new year, as strong mid-day rallies in crude fizzled.
Brent was down 91 cents at $56.42 a barrel. Earlier, it touched a post-2009 low of $55.48, having averaged around $110 a barrel between 2011 and 2013.
Front-month U.S. crude for February delivery settled down 58 cents a barrel at $52.69, before a steep 50-cent drop post-settlement.
The U.S. dollar index was 0.9 percent stronger on Friday. The combination of the supply glut and the strong dollar has been a "double whammy" for crude oil prices, said Walter Zimmerman, chief technical analyst at United-ICAP.
"This is a long-term cyclical downtrend," Zimmerman said. "It's going to take a while for prices to fall low enough to cut off that excess production."
Low trading volume also made the market vulnerable to knee-jerk reactions.
Saudi Arabia's King Abdullah bin Abdulaziz is suffering from pneumonia and temporarily needed help to breathe through a tube on Friday but the procedure was successful and his condition was now stable, the royal court said.
OPEC, the Organization of Petroleum Exporting Countries, which includes Saudi Arabia, declined to restrict oil output in November despite pressure from its member nations.
Iran's deputy foreign minister urged regional rival Saudi Arabia on Thursday to take action to support oil prices, saying producer countries across the Middle East will be hurt unless the price slump is reversed.
In the United States, benchmark oil prices took some support from data on Wednesday showing inventories fell by 1.8 million barrels in the last week, but an increase of 2 million barrels at the U.S. crude contract's delivery hub of Cushing, Oklahoma, kept prices under pressure.
traders were searching for a bottom in U.S. crude around the $52 a barrel mark, but Friday contained mostly sideways trading due to thin volume, said Carl Larry, director of business development at Frost & Sullivan.
"We're all waiting for the new money to come in next week," he said. (Additional reporting by Jessica Resnick-Ault in New York, David Sheppard in London, Meeyoung Cho in Seoul and Jane Xie in Singapore; Editing by Jason Neely, David Holmes, Bernadette Baum, Peter Galloway and Nick Zieminski)