Oil prices dug their heels in just above 25 dollars a barrel on Friday as a renewed trickle of oil from Iraq and expectations that the northern hemisphere winter would not be so severe as expected gnawed at demand.
The price of reference Brent crude for delivery in February slipped to 25.35 dollars a barrel in morning trade, from a closing price of 25.53 dollars on Thursday.
In New York, the benchmark light sweet crude January contract closed at 27.99 dollars overnight.
Prices retreated as concerns of a shortfall over the coming months continued to fade. But even some traders have been surprised by the extent of the recent sell-off.
"I think everyone is a little bit shell-shocked about recent moves on the downside; the market has moved a long way down and there doesn't seem to be too much support out there on the market," GNI trader Paul Goodhew said.
Trading in London was quiet in the run up to the Christmas holiday, and those traders left on the trading floor were looking to the United States for fresh inspiration, he said.
"A lot of people have had Christmas Parties fairly recently and there is not too many staff here at the moment, so trading is very quiet."
He said that everyone was waiting for the New York market to open in the afternoon "to really lead the market."
Prices have fallen to near seven-month lows in recent days from ten-year highs when fears of a shortage of oil during the northern hemisphere winter led to a buying frenzy that bid prices up above 35 dollars a barrel.
Concerns that Iraq would turn off its taps had lifted prices higher, but in the end the market brushed aside the embargo, comforted by signs of building stocks despite the winter weather.
News that Iraq had begun filling tankers for shipment at the Mina al-Bakr port this week caused prices to slide further, but some analysts remain cautious about the prospect of a full resumption of oil exports by Baghdad.
Lawrence Eagles at the GNI brokerage said that there have been reports "of six to 10 tankers waiting to fill off Mina al-Bakr, but are supposedly being prevented by poor weather from entering.
"We are still not convinced that Iraqi shipments will return to normal swiftly," he said -- LONDON (AFP)
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