The price of oil plunged 2 percent Friday, the largest one-day drop since April, as Libyan oil appears poised to return to the market while global demand looks to be muted.
Benchmark U.S. crude for August delivery fell $2.10 cents to close at $100.83 a barrel on the New York Mercantile Exchange. It fell 3.1 percent this week, and is down $4.54 a barrel, or 4.3 percent, so far in July.
Brent crude, a benchmark for international oils used by many U.S. refiners, fell $2.01 to close at $106.66 on the ICE Futures exchange in London.
Oil prices shot up in June to a 10-month high over concerns that violence in Iraq might disrupt supplies from OPECs second-largest exporter. Prices then drifted lower over the past two weeks as the advance by Iraqi insurgents stalled and oil exports were not threatened.
After a slight gain Thursday, the losses accelerated Friday. The day's loss was the biggest since oil fell 2.2 percent on April 22.
Along with more certainty about Iraqi supplies, a large increase in Libyan crude is expected to soon hit the market. Libyan exports have been slowed for nearly a year because of labor strife and other unrest, but recent agreements between the government and local militias may allow exports to surge in the coming weeks. U.S. crude production also continues to rise, adding even more oil to global supplies.
The International Energy Agency this week cited only a small increase in oil production by Saudi Arabia, suggesting that markets were well supplied. "Contrary to seasonal patterns, the Kingdom barely hiked production in June, a sign that demand for its crude may not have significantly increased," the Paris-based IEA said in its monthly oil market report.
At the same time, the IEA slightly lowered its 2014 forecast of global oil demand due to weaker-than-expected economic data in the middle of the year. It predicted demand would rise 1.5 percent next year, to 94.1 million barrels a day.
The U.S. Energy Department reported this week that gasoline supplies in the U.S., the world's biggest consumer, appear plentiful and U.S. demand fell slightly compared with last year.
In other energy futures trading:
- Wholesale gasoline fell 4.9 cents to close at $2.909 a gallon.
- Natural gas rose 2.6 cents to close at $4.146 per 1,000 cubic feet.
- Heating oil fell 3.2 cents at $2.861 a gallon.
AP Writer Pablo Gorondi contributed to this story from Budapest.