Updated from 10:59 a.m. EST
Oil prices slid below $56 Friday as traders liquidated positions and focused on contradictory reports on OPEC's production levels.
Light, sweet crude for December delivery lost 45 cents to $55.81 a barrel. The expiration of the December contract Friday was injecting additional volatility into trading as traders closed out positions. Prices typically plummet on the last trading day of a contract. The soon-to-be front-month January crude futures contract climbed 40 cents to $58.97.
Oil prices for December delivery plunged to $54.86 earlier this morning, their lowest level in the past 17 months. On Thursday, the December contract lost $2.50, or more than 4%, to settle at $56.26 because of conflicting tanker traffic reports and brimming fuel supplies.
Those same factors helped crude extend its decline Friday. Petrologistics, a Geneva-based oil consultancy, expects OPEC production will fall by 1.1 million barrels per day, in line with the cartel's announced cut, according to
. But Oil Movements in London predicted OPEC will export 210,000 more barrels in the month ending Nov. 4 for a total of 24.84 million. For the rest of this month, shipments will climb by 40,000 barrels.
The conflicting estimates, along with speculation that a hedge fund's energy bets have soured, were other reasons for bullish traders to take oil prices lower. Speculation mounted that Citadel Investment Group, a $12 billion fund in Chicago and the buyer of Amaranth Advisor's energy deals, was having trouble, according to the
Wall Street Journal
But Citadel Spokesman Bryan Locke shot down the speculation, telling the newspaper: "We are aware of the rumors. They are completely unfounded."
OPEC has steadfastly maintained it is trimming output by 1.2 million barrels per day, but groups like the U.S. Energy Department have said otherwise. Last week, the federal agency estimated OPEC would decrease daily production by fewer than 800,000 barrels.
With oil prices under $56, it appears increasingly likely the cartel will slash output further at its Dec. 14 meeting in Nigeria. At an emergency meeting last month, OPEC ministers opted to cut output to support sagging oil prices.
Unleaded gasoline and heating oil each gained 1 cent to $1.54 a gallon and $1.66 a gallon, respectively. Natural gas inched up 42 cents to $8.17 per million British thermal units.
Energy shares were gaining ground, meanwhile, on the Amex Oil and Philadelphia Oil Service Indices. Exploration and refining companies were picking up 0.8%, led by
The evacuation of
Texas City refinery Thursday was helping send shares of the British oil company down 0.5% to $66.27. Around 800 people were evacuated from the refinery because of a pipeline leak,
reported. The refinery, the company's largest in the U.S., has been slowly coming back online after Hurricane Katrina and a deadly explosion last year forced its closure.
Shares of oil service companies were increasing 0.5%, with