BANGKOK – Oil prices fell Friday after traders who believe crude prices may be too high unloaded their investments to lock in gains.
Benchmark crude for January delivery was down 36 cents to $87.72 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract rose $1.58 to close at $88.07 on the Nymex on Thursday.
"Some traders and investors in the market fear that the gains (in prices) over the last few days have been excessive, given the weak fundamentals in oil markets," said Victor Shum, energy analyst at consultancy Purvin & Gertz in Singapore. "It's really profit-taking."
Oil demand is not expected to spark dramatically in the coming months as the world's major energy consuming economies struggle to maintain growth. Ample crude supplies will also likely keep prices in check.
There was no progress Thursday in closely watched budget talks in Washington. U.S. lawmakers are trying to hammer out a deal to avoid a series of automatic tax increases and spending cuts that could drag the U.S. economy into recession if they go into effect.
Markets have been volatile ahead of the Jan. 1 deadline for an agreement to be reached to avoid the so-called fiscal cliff.
In other trading, Brent crude, which is used to price international varieties of oil, fell 34 cents to $110.42 per barrel on the ICE Futures Exchange in London.
Other futures on the New York Mercantile Exchange:
— Heating oil fell 0.4 cent to $3.053 a gallon
— Natural gas fell 0.4 cent to $3.644 per 1,000 cubic feet
— Wholesale gasoline fell 1.4 cent to $2.72 a gallon