Oil Prices Slide On Supply Glut
NEW YORK (AP) _ Oil prices have tumbled amid a supply glut and worries that it could worsen if the Organization of Petroleum Exporting Countries fails to reach a harmonious accord at its meeting in Vienna, Austia, this week.
In Monday trading at the New York Mercantile exchange, contracts for January delivery of West Texas Intermediate, the benchmark U.S. crude, closed at $18.25 a 42-gallon barrel, down 49 cents from Friday.
Among refined products, contracts for wholesale heating oil skidded 1.33 cents per gallon to 54.93 cents per gallon, while unleaded gasoline closed at 46.84 cents per gallon, down 1.11 cents.
Madison Galbraith, senior energy specialist at Merrill Lynch Energy Futures, said ″a general lack of buying″ offset by ″lots of liquidity″ was mainly responsible for Monday’s slide.
John O’Dea, manager of international energy futures at Dean Witter Reynolds Inc., agreed with that view, saying worries about the OPEC meeting also did not help.
The 13-nation cartel meets Wednesday in hopes of bringing its spiraling production under control. Some members, including Iran, want to raise prices, while others, including Saudi Arabia, want to keep the cartel’s target price at $18 a barrel.
″If they’re lucky, they’ll keep the same agreement they have,″ O’Dea said. ″You either have an agreement and a cartel, or you don’t.″
But O’Dea noted that OPEC’s overproduction is not the only source of the supply problem, pointing out that output from Mexico, the North Sea and other points is only adding to the world glut, putting downward pressure on prices.
The analysts said that if the meeting should end on a divisive note, even the existing levels near $18 a barrel would be threatened.