Oil traded slightly lower on Friday, after paring gains from early in the session, as a supply glut in top consumer the United States trumped worries about falling production from Libya.
The market had come under pressure from Wednesday's DOE report, which showed a 7.3 million-barrel rise in crude inventories to their highest December level on record. Analysts had expected a seasonal decline. [EIA/S]
“The numbers on Wednesday were really bearish, and it’s possible the market is still trying to digest them,” said Andrew Lebow of Jefferies in New York. “Maybe the path of least resistance is down here, given that we’ve been in a long down trend.”
Crude imports by Japan, the world's fourth-biggest oil buyer, dropped 17.3 percent in November from a year earlier to 14.68 million kilolitres (3.08 million bpd), government data showed on Thursday.
Brent crude LCOc1 was at $60.01 at 10:04 a.m. EST (1504 GMT), down 23 cents, while US crude CLc1 fell 18 cents to $55.64 in thin trade as many countries were still on Christmas holiday.
Fighting in Libya has cut output there to 352,000 barrels a day, a state oil company spokesman said on Thursday, or about half November's average . This countered the U.S. Department of Energy's (DOE) report showing a big stockbuild.
"Libya is a supportive factor," said Olivier Jakob, analyst at Petromatrix in Zug, Switzerland. "The fighting in Libya is starting to be more and more about a battle for the oil resources and this will not end well."
In Libya, a rocket set a storage tank at the country's biggest export terminal, Es Sider, on fire as armed factions allied to competing governments fought for control, officials from both sides said on Thursday.
On Friday, officials said the blaze had spread to two more tanks.