The price of oil fell below $100 a barrel for the first time since May even as the deteriorating security situation in Libya has raised questions about whether the country can soon increase crude exports.
Benchmark U.S. crude for August delivery fell 95 cents to close at $99.96 a barrel on the New York Mercantile Exchange. Oil is down 5 percent since the beginning of the month.
Brent crude, a benchmark for international oils used by many U.S. refineries, fell 92 cents to close at $106.02 on the ICE Futures exchange in London.
Prices have been falling in recent weeks as worries about supply disruptions from Iraq eased and on the prospect of more supplies from Libya. Weaker than expected economic data for the first half of the year prompted the International Energy Agency and other experts to trim their forecasts for short and medium term demand.
On Tuesday, Fed Chair Janet Yellen's remarks to Congress on the U.S. economy strengthened the value of the U.S. dollar, also helping to push oil lower. Because oil is priced in dollars, a stronger dollar makes oil look comparatively more expensive — and therefore less desirable — to holders of other currencies.
But analysts say the price of oil may not be able to fall much further, in part because increased supplies from Libya are far from assured. Fighting between rival militias over Tripoli International Airport and battles in the eastern city of Benghazi are casting doubt on plans to reopen two oil terminals that would boost the country's crude exports by about 500,000 barrels a day. Libya now produces around 350,000 barrels of oil a day.
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