Oil prices slipped further below $90 a barrel Friday as investors took profits amid light year-end trading volume. Despite the fall, oil prices are set to end the year around 12 percent higher than where they started — a clear signal that the global economy has returned to growth following the worst recession since World War II .
By early afternoon in Europe, benchmark oil for February delivery was down 37 cents to $89.47 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost $1.28 to settle at $89.84 on Thursday.
Crude has dropped this week from a 26-month high of $91.88 on Monday as some investors sought to take profits after oil rallied during the fourth quarter from the mid-$70s.
Year-end trading is often complicated by investors closing out positions to present their portfolios in as good a light as possible.
"We're viewing the sharp sell-off as a deserved market correction within a bull market that has not likely seen a top," Ritterbusch and Associates said in a report.
Prices have also been weighed down somewhat by the news that U.S. crude supplies fell less than analysts expected last week. That suggests that growth in oil demand may disappoint.
The Energy Department's Energy Information Administration said Thursday that oil supplies declined by 1.3 million barrels last week. That was way lower than many analysts had been expecting — Platts, the energy information arm of McGraw-Hill Cos., for example, forecast a decrease of 3.2 million barrels.
Concerns about the health of the world economy and its bearing on oil demand continued to preoccupy the market.
"Some positive economic news from the U.S. — such as the recent decline in initial jobless claims — at year ending should not outshine how fragile the global economic recovery is," said analysts at JBC Energy in Vienna.
For its part, Sucden Research said weather factors could have an effect on oil prices from next week.
"There may be evidence of disruption to production offshore Australia and cold weather returning again to Europe. China still faces cold temperatures, and some Chinese regions could face power shortages up to about 10 percent of last year's consumption during the first two months of the year," Sucden said.
Despite starting lower on Friday, Sucden highlighted the vigor of oil prices as 2010 comes to a close.
"At a healthy percentage above the current annual average (near $79.68), Friday's closing price for WTI crude oil futures is likely to be the best annual close since 2007 and around 13 percent above last year's close," the London-based firm said.
In other Nymex trading in January contracts, heating oil dropped 1.55 cents to $2.4699 a gallon, while gasoline gained 0.84 cent to $2.4002 a gallon. February natural gas futures rose 2.2 cents to $4.36 per 1,000 cubic feet.
In London, Brent crude fell 48 cents to $92.61 a barrel on the ICE Futures exchange.
Associated Press writer Alex Kennedy in Singapore contributed to this report.
LONDON (AFP) – World oil prices dipped on Friday, a day after US data showed the country's crude stocks had declined less than expected, analysts said.
Brent North Sea crude for delivery in February lost just a cent to 93.08 dollars a barrel in London trade.
New York's main contract, light sweet crude for February fell 13 cents to 89.71 dollars a barrel.
"The slight drop in crude price... is likely due to US weekly data indicating lower-than-expected crude oil inventories drawdown," said Barclays Capital analyst Chen Xin Yi.
Figures released Thursday by the US Department of Energy showed crude stock piles had fallen by much less than expected, even given the cold weather in much of the United States.
Crude stocks fell by 1.3 million barrels, much lower than the nearly three million barrel drop that market analysts were predicting.
The United States is the world's biggest oil consuming nation and the weekly stocks report is widely monitored by the market.
Crude prices this week have been boosted by the extreme cold weather and blizzards across the northern hemisphere, with households using more heating oil.
BEIJING (Reuters) – China will crack down on what it called illegal Internet telephone providers, according to a circular from the Chinese government seen on Friday that could potentially affect Internet calling service Skype.
The statement, from the powerful Ministry of Information and Industry Technology, did not mention any carriers by name.
It called for a crackdown "on illegal VoIP (voice over Internet protocol) telephone services" and said it was collecting evidence for legal cases against them.
Skype, partly owned by web retailer eBay Inc, has been growing in popularity among Chinese individuals and businesses to make cheap or free international phone calls.
The circular, dated December 10, did not say what amounted to illegal services and did not name any VoIP providers it considered to be breaking the law.
Spokespeople for the ministry and the ministry's office gathering information for the campaign did not answer telephone calls on Friday. Skype could not immediately be reached for comment.
The move appeared to be aimed at protecting three government-controlled Chinese phone carriers -- China Telecom, China Unicom and China Mobile -- which provide the bulk of China's telephone services.
The Hong Kong-based South China Morning Post on Thursday quoted an unidentified ministry official as saying VoIP services could only be provided by the big three Chinese operators.
Spokespeople for China Telecom and China Unicom did not answer phone calls on Friday. A spokeswoman for China Mobile, reached in Beijing, referred calls to the firm's Hong Kong office. Attempts to reach the Hong Kong office were not successful.
VoIP calls allow users to make international calls for much less than commercial providers, or even for free if both parties are using VoIP. Many businesses that use VoIP services to cut down on their international telephone costs could lose access to the cheaper alternative.
Skype, which has about 124 million users worldwide, hopes to raise about $1 billion in an initial public offering expected next year.
(Reporting by Terril Yue Jones and Sui-lee Wee; Editing by Benjamin Kang Lim and Alex Richardson)