Oil prices dropped on Friday as the market braced for rising Libyan output, while soft Chinese service-sector data softened demand for the growth-sensitive commodity as well.
Oil prices largely ignored an otherwise bullish U.S. supply report.
On the New York Mercantile Exchange, West Texas Intermediate crude for delivery in February traded at USD94.17 a barrel during U.S. trading, down 1.33%. New York-traded oil futures hit a session low of USD93.38 a barrel and USD95.74 a barrel.
The February contract settled at USD95.44 on Tuesday, down 3.03%.
Nymex oil futures were likely to find support at USD92.57 a barrel, the low from Dec. 2, and resistance at USD95.74 a barrel, the earlier high.
Ongoing expectations for Libyan oil exports to resume to near normal levels sent prices falling due to the added supply they''d bring to the global market.
Libyan oil operations faced glitches in the recent past due to protesters disrupting production at various oilfields.
Expectations for increased exports from South Sudan also nudged prices lower.
Prices also slumped after data showed that China''s non-manufacturing purchasing managers'' index fell to 54.6 in December from 56.0 the previous month.
Also this week, data revealed that China’s final HSBC PMI inched down to 50.5 in December from 50.8 in November, which bolstered the greenback''s safe-haven appeal.
That report came a day after government data showed that China’s manufacturing PMI fell to a four-month low of 51.0 last month from 51.4 in November and worse than forecasts for a decline to 51.2.
China is the world''s second-largest consumer of crude oil.
The U.S. Energy Information Administration reported in its weekly report earlier that U.S. crude oil inventories fell by 7.01 million barrels in the week last week, far surpassing market expectations for a decline of 2.98 million barrels.
The report also showed that total motor gasoline inventories fell by 844,000 barrels compared to expectations for a gain of 1.93 million barrels.
However, the government added that distillate fuel, which includes diesel and heating oil, rose by 5.04 million barrels, defying market calls for a gain of 1.23 million, which overshadowed crude''s losses.
Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for February delivery fell 0.70% to trade at USD107.03 a barrel, while the spread between the Brent and U.S. crude contracts stood at USD11.29 a barrel.
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