Oil prices fell below $90 for the first time this month on expectations that OPEC will increase output next week and fading concerns that a pipeline fire in the U.S. will disrupt supplies.Light, sweet crude for January delivery fell $1.85 to $89.16 a barrel in electronic trading on the New York Mercantile Exchange by mid-afternoon in Europe. On Thursday, the crude contract gained 39 cents to settle at $91.01 a barrel in choppy trade.
In London, January Brent crude dropped $1.41 to $88.81 a barrel on the ICE Futures exchange.
Oil prices have tumbled this week amid speculation that supplies are rising and a slowdown in U.S. growth will undercut energy demand.
A week after flirting with the $100 per barrel barrier, analysts said a quick price drop could be in store if oil settles below $90.
“The correction process will no doubt accelerate rapidly, making a level of $80 a barrel quite likely in the next few weeks,” said Commerzbank analyst Eugen Weinberg in Frankfurt.
The fire along the oil pipeline from Canada to the Midwest caused a spike above $95 a barrel Thursday — and renewed speculation that oil was as back on its way to $100. But by the end of New York floor trading it was clear most of the network was quickly returned to service and that the fire-damaged section was expected to be back up in days.
An offer by the U.S. government to release oil from the Strategic Petroleum Reserve, if needed, also helped calm markets.
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