By Daniel Huang
U.S. oil prices fell to the lowest level in almost two months on
Friday as signs of abundant supplies spurred investors to resume
selling.
Light, sweet crude for August delivery fell $2.10, or 2%, to
$100.83 a barrel, the lowest closing price since May 12 on the New
York Mercantile Exchange. Prices had climbed Thursday after falling
for nine straight sessions, but Friday's drop erased those gains.
Brent crude for August fell $2.01, or 1.8%, to $106.66 a barrel on
the ICE Futures Europe exchange.
Friday's drop in the Nymex crude contract was the largest since
April 22.
Libya's largest oil field resumed production this week after
protesters ended a four-month strike, triggering expectations of a
bloated global supply. The 340,000-barrels-a-day Sharara field
could bring Libya's oil production close to one million barrels a
day, three times the current level, analysts said.
"There are continuing concerns about oversupply," said Peter
Donovan, an energy broker at Liquidity Energy in New York. "The
market has fallen very hard due to the potential for barrels coming
out of Libya."
In the U.S., government data released Thursday revealed an
increase in the amount of oil stored in Cushing, Okla., the
delivery point for the Nymex crude contract. This increase reversed
a trend of declining supplies at the storage hub that had been a
bullish driver for U.S. oil prices.
Technical factors were also at play. Prices fell below the
100-day moving average during the session, which accelerated the
decline, said Bob Yawger, director of the futures division at
Mizuho Securities in New York.
One of the most widely watched indicators in the market, the
100-day moving average is "especially important for long traders,"
Mr. Yawger said. "Once prices fell below the number, that's as much
pain as they can take."
A report by the International Energy Agency pointing to rising
future demand for crude did little to brake the slide in oil
prices. The IEA forecast oil-demand growth at 1.4 million barrels a
day next year, compared with 1.2 million barrels a day this year.
The estimate came a day after the Organization of the Petroleum
Exporting Countries also predicted improved demand growth for
2015.
Nymex crude ended 3.1% lower for the week. Money managers,
including hedge funds and pension funds, cut their bullish bet on
oil to its lowest point in two months in the week ended Tuesday,
according to data from the Commodity Futures Trading Commission.
These investors cut 18,545 bets on rising prices and added 7,237
bets on falling prices, leaving the market with a net-long position
of 304,366, the lowest level since May 6.
Write to Daniel Huang at daniel.huang3@wsj.com
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