Analysts struggled to find reasons for the steep fall of oil on Thursday that continued on into Friday. Oil gave up about 10%, with Brent crude at one point in early European trading giving up more than $5 before recovering to a position down $1.98, to trade at about $108.82 per barrel.
According to Reuters, Thursday's drop was the second biggest ever for oil, which at one point saw Brent down by $12 per barrel, its largest one-day fall ever. Overall it gave up approximately $10 per barrel, but Friday's losses did not look to continue the trend in quite so spectacular a fashion. A major bank trader was quoted as saying, "With Asian funds having liquidated some of their positions, I think we will now see prices stabilizing, and even if U.S. jobs data is poor this afternoon, I don't think it will turn out as horrible as yesterday."
The JBC Energy Research Center said in a statement, "There is no way that daily economic data has the power to cut $10 out of oil in one go." It added, "the most important single reason for yesterday's sell-off simply appears to be that a sell-off was due."
A trader at an oil major was quoted as saying, "It seems it's all been driven down since Osama got shot, but I don't see that as particularly bearish myself. I don't see what difference it makes, to be honest." And another oil major trader said, "The fear premium is reducing as the memory effect cuts in and people are used to the Middle Eastern situation.... Investors think oil has finished its run and are looking for performance elsewhere."
An OPEC delegate who declined to be identified by name, meanwhile, welcomed the fall in oil prices, saying in the report, "The price had been going too high, to $120 a barrel, which is not good for consumers because it can affect the world economy. A price in the range of $90 to $100 will be ideal."
He added that change in output as a result of the June 8 OPEC meeting was unlikely. "I do not think we're prepared to change the quota at the moment due to the geopolitical uncertainty," he was quoted as saying. "Libya's production has dropped dramatically, but there has been a compensation by Saudi Arabia and other members."
But a Gulf delegate from OPEC said, "I think OPEC may consider raising production as a psychological factor that would help prices come down."