Oil prices neared eight-month lows Friday as concerns over global energy demand deepened amid worries over economic growth in the U.S. and Europe.
Disappointment over the U.S. Federal Reserve's apparent lack of commitment to immediate stimulus was the main driver of Friday's selloff, traders said. Elevated U.S. crude inventories and expectations that the world's biggest oil producers would keep output at a three-year high also weighed.
"The only thing that was going to save this market from collapsing was a bunch of stimulus," said Phil Flynn, analyst at Price Futures Group in Chicago. "We really didn't get the stimulus that the market was hoping for."
But crude-oil futures came off their intraday lows late in the day, after reports that top European officials were exploring ways to shore up Spain's ailing banks, with light, sweet crude for July delivery finishing 72 cents, or 0.9%, lower at $84.10 a barrel on the New York Mercantile Exchange. Nymex crude rose 87 cents on the week, after spending several days rising on expectations of a Fed move.
Brent crude on the ICE Futures Europe exchange fell 46 cents, or 0.5%, to $99.47.
In the U.S., traders remained wary of buying crude a day after Federal Reserve Chairman Benjamin Bernanke said the central bank remains "prepared to take action" to shore up the U.S. economy but stopped short of suggesting that any additional stimulus was imminent.
Previous actions by the Fed have weakened the dollar, boosting the price of dollar-denominated commodities like oil because they become cheaper for foreign buyers.
The oil market has shown signs that it is increasingly well-supplied recently. In the U.S., stockpiles remain near their highest levels since 1990, and gasoline inventories surged 3.3 million barrels in the week ended June 1, according to the Energy Information Administration.
The EIA said Friday that U.S. oil output in the first quarter rose 11.6% from a year earlier, topping 6 million barrels a day for the first time in 14 years.
Meanwhile, the burden for motorists at the pump has been easing. July gasoline futures on Friday settled 0.02 cent higher at $2.6852 a gallon, and are off 21% from their 2012 highs reached in March.
At the pump, a gallon of regular gasoline currently fetches $3.56 a gallon, according to auto club AAA, down 24 cents from a month ago.
Attention next week is likely to shift to Thursday's meeting of the Organization of Petroleum Exporting Countries in Vienna.
OPEC most recently said it was pumping 32.42 million barrels a day of oil, a level not seen since the summer of 2008, and has acknowledged that it is producing more oil than the market needs.
However, market observers said the bloc may choose to keep output high as tightening sanctions reduce oil output in Iran. The country is OPEC's second-largest producer behind Saudi Arabia, which has boosted output to account for the decline in Iranian exports. In addition, despite the recent decline in prices, Brent crude, the European benchmark, is still trading around $100 a barrel, a level most OPEC members say is acceptable.
"Everybody is anticipating status quo" at the OPEC meeting, said Dominick Chirichella, analyst at the Energy Management Institute, a consultancy. "I don't think the Saudis are going to be willing to do anything other than what they're doing."
Separately, exchange-operator CME Group Inc. said it fined Morgan Stanley $50,000 for allegedly overstating its open interest in a crude-oil contract one day before the contract's expiration in November 2011.
Morgan Stanley declined to comment. It was the second penalty the bank has faced this week in commodities trading after regulators said they reached a $5 million settlement with the bank over allegedly improper trades of several off-exchange futures.
Copyright (c) 2012 Dow Jones & Company, Inc.
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