Oil prices clawed back some of their early losses Friday but still ended the day below $56 US a barrel for the first time since June 2005.
The light sweet crude December futures contract, which expires Friday, fell as much as $1.40 in early morning trading to hit $54.86 US a barrel on the New York Mercantile Exchange. By the close of trading in New York, the December oil contract was down 45 cents at $55.81 US a barrel.
High U.S. oil inventory figures got some of the blame for Friday's selling pressure, as did warmer than usual weather.
Reuters also said there were rumours in the marketplace that an unnamed fund was unwinding its oil positions.
On Thursday, the price of oil fell by $2.50 US a barrel — the biggest drop in 15 months — as the market grappled with a cooling U.S. economy, a relatively warm autumn in many parts of North America, healthy supplies of home heating oil and an OPEC output cut.
The price of oil has retreated sharply from the high of $78.40 US hit on July 14.
Some analysts said the market could be headed for some firming in prices ahead.
"Now with OPEC already talking another production cut and the extremely strong demand we should soon pressure the upside of our current trading range," said Phil Flynn, an analyst at Alaron Trading Corp. "And to break out we will need just one little bullish story to get the complex rolling."
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