Oil prices drop on ample supplies

Crude prices fell Friday as Libya is reportedly prepared to boost oil output. A spokesman of the Libyan National Oil Corporation said Thursday that the country's largest oil field which has an output capacity of 330,000 barrels a day is expected to resume production within two or three days. Currently oil output in Libya has slipped to about 250,000 barrels a day from the 2011 level of 1.5 million barrels a day before the civil war. Energy Information Administration (EIA), the Energy Department' s statistical arm, on Friday released its report covering U.S. crude supplies of the week ending on Dec. 27. Crude inventories fell 7 million barrels to 360.6 million barrels, bringing the five-week decrease to 30.8 million. Market expectation is a drop of 2.9 million barrels. Meanwhile, the report showed that U.S. supplies of distillate fuel and gasoline climbed. Analysts attributed the drop of crude supplies to a tax incentive that encourages oil companies to draw down inventory at year-end. The U.S. dollar posted a strong performance recently on speculation that the Federal Reserve would reduce stimulus. A stronger U.S. currency makes dollar-denominated crude less appealing as an investment. Light, sweet crude for February delivery moved down 1.48 dollars to settle at 93.96 dollars a barrel on the New York Mercantile Exchange, while Brent crude for February delivery decreased 89 cents to close at 106.89 dollars a barrel.