Oil futures edged lower Friday on
expectations that booming U.S. production would lead to a buildup in
supplies this month.
Light, sweet crude for February delivery fell 14 cents, or
0.1%, to $95.30 a barrel on the New York Mercantile Exchange. Brent
crude on ICE Futures Europe recently traded up 9 cents, or 0.1%, at
$107.87 a barrel.
The Energy Information Administration is expected to report
that U.S. crude-oil supplies fell by 2.2 million barrels in the week
ended Dec. 27, according to a survey conducted Tuesday by The Wall
Street Journal. The EIA report is due to be released Friday at 11 a.m.
EST.
But a report issued Thursday by a private industry group
showed a rise in stocks in Cushing, Okla.--the delivery point for
benchmark U.S. oil--indicating that supplies might be more ample than
expected, said Peter Donovan, energy broker for Liquidity Energy.
U.S. production is booming as hydraulic fracturing and
horizontal drilling techniques enable energy producers to access
supplies trapped in shale-oil fields. In October, the most recent month
for which data is available, domestic crude-oil production hit its
highest level for the month since 1988, according to the EIA.
Storage levels usually fall in December as Gulf Coast
refineries try to reduce their inventories before year-end tax
assessments.
Some Gulf Coast states levy taxes based on the amount of oil
refineries have in storage at the end of the year. In addition, the
federal tax system operates according to a "last in, first out" method
that benefits refineries when their year-end stockpiles are the same as
they were the prior year.
Even if the EIA report shows a decline in supplies, it could
be due to the tax incentives, rather than strong demand, said Dominick
Chirichella, analyst for the Energy Management Institute. Market
watchers expect storage levels to build back up in January, he said.
Brent oil futures wobbled Friday as traders weighed reports that more Libyan oil production could come online.
Protesters at one of Libya's largest oil fields said Thursday
they have halted their demonstrations, allowing operations at the field
to restart within two to three days.
The 350,000-barrel-a-day El Sharara field, operated by Repsol
SA (REPYY, REP.MC), has been stopped for two months due to labor unrest.
A resumption of disrupted Libyan oil production could increase
global supplies, pressuring prices. However, oil ports in central and
eastern Libya remain closed.
Front-month February reformulated gasoline blendstock, or
RBOB, recently traded down 0.44 cent, or 0.2%, at $2.6906 a gallon.
February heating oil fell 0.29 cent, or 0.1%, at $2.9838 a gallon.