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Brent oil traded near $60 on concern that the Organization of Petroleum Exporting Countries (Opec)'s refusal to cut production will worsen a global glut and as Libyan fighting intensified. Trading was less than one-third of the 100-day average.
Brent and West Texas Intermediate oils were headed for a fifth weekly loss, extending their annual declines of more than 40 per cent, as the Opec resisted supply cuts to defend market share while the highest US production in three decades exacerbated a global glut.
In Libya, several tanks were on fire at the Es Sider terminal as Islamist militias attacked the country's largest petroleum port, state-run National Oil Corp said on Friday. Saudi Arabia, Opec's biggest producer, is assuming an oil price of $80 a barrel for 2015, said John Sfakianakis, a former economic advisor to the country's government.
"We are still in a state of oversupply," said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC. "The disruption in Libya may contribute to Brent's stabilisation in the near term."
Brent for February settlement slipped 6 cents to $60.18 a barrel at 10:48 am New York time on the London-based ICE Futures Europe exchange. The volume of all futures was 88 per cent below the 100-day average with much of Europe on holiday after Christmas.
West Texas Intermediate crude for February delivery fell 11 cents to $55.73 on the New York Mercantile Exchange with volume 73 per cent below the 100-day average. Brent traded at a premium of $4.45 to WTI on the ICE.
US crude stockpiles climbed 7.27 million barrels in the week ended December 19, the most in two months, the Energy Information Administration (EIA) said December 24.
The gain left US crude stockpiles at 387.2 million barrels, the highest level since June, according to data from the EIA, the Energy Department's statistical arm.
Opec, whose 12 members supply about 40 per cent of the world's oil, decided at a November 27 meeting to maintain its production target at 30 million barrels a day.
The group pumped 30.56 million barrels a day in November, exceeding its target for a sixth straight month, a Bloomberg survey of companies, producers and analysts shows.
The fighting in Libya caused crude output to decline to 352,000 barrels a day, Mohamed Elharari, the company's spokesman, said on Thursday. That compares with daily production of close to 1.6 million in 2011.
"The situation is getting worse in Libya and we can pretty much write off supplies from there," said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland. "Even without an Opec supply cut, we are getting one from Libya."
The fire started on Thursday in storage tanks that were hit by Islamist militia rockets.
National Oil "calls on warring parties to stay away from the petroleum facilities in order to preserve the only livelihood of the Libyans," according to a text message sent by the company's spokesman Mohamed Elharari.
"Disruption to Libya's oil production helps Brent to stay up and helps WTI to stay up too," said Carl Larry, a Houston-based director of oil and gas at Frost & Sullivan. "We are seeing a little bounce back. The only thing we need to fear is profit-taking when prices go up."
