Oil Prices Down as Market Awaits Fed Meeting

The price of oil slid below $97 a barrel Friday, on the possibility of new supplies from Libya and expectations the Federal Reserve will cut its stimulus program.

Benchmark U.S. crude for January delivery dropped 90 cents to $96.60 a barrel on the New York Mercantile Exchange. For the week, oil fell $1.05 a barrel.

The Libyan militia that has shut down most of the country’s oil terminals for months has said the terminals will reopen Dec. 15. Libya has been losing millions of dollars every day after production dropped from 1.4 million barrels a day to around 250,000 barrels a day since the closure.

Libya has said it hopes to increase output to 2 million barrels a day once unrest ebbs. OPEC members may have to reduce their production to keep prices from dropping sharply and hurting oil revenues that underpin their economies.

Oil prices were also under pressure from expectations that the Fed could decide next week to reduce its $85 billion monthly bond purchases meant to stimulate the economy.

Oil prices have generally benefited from the stimulus, which has helped keep the dollar relatively weak, making crude cheaper for investors using other currencies. Commodities like oil have also attracted traders looking for higher returns than those of low-yielding bonds.

At the gas pump, the average price for a gallon of gasoline stayed at $3.25, according to AAA. That’s up 6 cents from a month ago but down 5 cents from this time last year.

Brent crude, a benchmark for international oils, fell 6 cents to $108.32 a barrel on the ICE exchange in London.

In other energy futures trading on the Nymex:

• Wholesale gasoline was flat at $2.63 a gallon.
• Heating oil was little changed at $2.97 gallon.
• Natural gas rose 5 cents to $4.40 per 1,000 cubic feet.