Oil Price Drop Is Slowing A Bit

Geopolitical troubles, possible OPEC moves mean prices may not fall much further.

WASHINGTON — After a downhill sprint to $60 a barrel, oil prices have run into headwinds caused by geopolitics and OPEC, making further steep declines more difficult.
Motorists can expect recent relief at the pump to continue, analysts said, though the nationwide average could very well stay above $2 a gallon for the remainder of the year.
For now, the U.S. economy may have to take what it can get — prices that are high and volatile by historical standards, but not as painful as many feared.
Crude-oil futures in New York settled Friday at $59.76 a barrel, a decline of 27 cents.
Early in the week, it appeared oil was caught in an unstoppable free-fall. Futures plunged by more than $4 in two days to a seven-month low, and some analysts said $50 per barrel was likely if global inventories kept rising.
Then, halfway through Wednesday’s trading session, the selling came to a halt when violence in Nigeria flared up and there was renewed talk of possible U.N. sanctions against Iran over its nuclear ambitions. Although supplies were not affected, geopolitical jitters — temporarily absent as a market-moving force — were now back on the map, analysts said.
“The risk of things getting far worse in Nigeria have, until now, been severely underestimated in the market,” said Fimat USA analyst Antoine Halff. As for tensions between Iran and the West, Halff said it is only a matter of time before there is more saber-rattling from both sides as they try to negotiate a resolution to Tehran’s uranium enrichment program.
On Thursday, traders awoke to reports of an informal agreement by the Organization of Petroleum Exporting Countries to trim its output by 1 million barrels a day.
Nevertheless, oil could continue to dip until barrels come off the market.