Oil declines in thin, volatile trading

Fri Jan 2, 2015 3:23pm EST
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By Samantha Sunne

NEW YORK (Reuters) - Global benchmark Brent crude oil closed down nearly a dollar a barrel Friday after a day of choppy trading despite expectations of new investments in the new year, as strong mid-day rallies in crude fizzled.

Brent was down 91 cents at $56.42 a barrel. Earlier, it touched a post-2009 low of $55.48, having averaged around $110 a barrel between 2011 and 2013.

Front-month U.S. crude for February delivery settled down 58 cents a barrel at $52.69, before a steep 50-cent drop post-settlement.

The U.S. dollar index was 0.9 percent stronger on Friday. The combination of the supply glut and the strong dollar has been a "double whammy" for crude oil prices, said Walter Zimmerman, chief technical analyst at United-ICAP.

"This is a long-term cyclical downtrend," Zimmerman said. "It's going to take a while for prices to fall low enough to cut off that excess production."

Low trading volume also made the market vulnerable to knee-jerk reactions.

Saudi Arabia's King Abdullah bin Abdulaziz is suffering from pneumonia and temporarily needed help to breathe through a tube on Friday but the procedure was successful and his condition was now stable, the royal court said.

OPEC, the Organization of Petroleum Exporting Countries, which includes Saudi Arabia, declined to restrict oil output in November despite pressure from its member nations.   Continued...

A motorist holds a fuel pump at a Gulf petrol station in London in this file photo taken on April 18, 2006. REUTERS/Luke MacGregor