US benchmark West Texas Intermediate for February delivery dropped $1.11 to finish at $54.73 a barrel on the New York Mercantile Exchange.
Andy Lipow of Houston petroleum consultant Lipow Oil Associates, said the market remains preoccupied with growing production and uncertain demand. He noted that Wednesday’s US oil inventory report showed a large build in crude and gasoline supplies.
“The market remains under pressure after seeing the EIA (US Energy Information Administration) statistics from Wednesday, which showed a build across the board, for crude oil and petroleum products,” he said.
The oil market opened higher on Friday following news that three storage tanks were on fire at one of Libya’s main oil terminals.
Since the clashes erupted on December 13, Libyan oil production has fallen to nearly 350,000 barrels per day compared with 800,000 previously, according to industry experts.
Crude prices also got a bit of a lift from the release of the Saudi Arabia 2015 budget, which implied the unofficial leader of the Organization of the Petroleum Exporting Countries sees oil prices rebounding somewhat next year.
But prices turned negative later in Friday’s session as worries about oversupply took hold again. Oil prices have lost about 50 percent of their value since June.