Oil falls 34% in 2 months

Press, 9 July 1986, Page 36

Oil falls 34% in 2 months

NZPA-Reuter London American crude oil prices have fallen a sharp 40c to 80c a barrel this week, chalking up a loss for the fifth consecutive trading session. On the spot market, West Texas intermediate, the American bench-mark crude oil, fell 50 U.S. cents a barrel on Monday to SUSII.IB. On the futures market, which was closed on . Thursday, prices were down 80c, to $11.19 a barrel. Prices have fallen from about $l7 a barrel in midMay, a decline of 34 per cent in less than two months.

Oil traders and industry sources said that increasing supplies of crude oil and oil products were pushing prices down. “The market is being dragged down by these supplies of crude oil and products. It is a fundamentally driven market and technicals are on the sidelines,’’ said Mr Andrew Lebow, an oil analyst with Shearson Lehman Brothers. A technical analyst at Merrill Lynch Futures said that a fall in West Texas crude to $lO a barrel was possible if supplies kept mounting. That price has already

been breached in Europe, where Brent crude oil, the bench-mark North Sea oil, was quoted in the spot market at $9.85 a barrel on Monday, down from $10.05 last week.

Oil industry sources said there were increasing signs that world sup-plies-were again rising, and this, they said, was contributing to the lower prices. The Middle East Economic Service has reported that output of members of the Organisation of Petroleum Exporting Countries in June had .topped its earlier estimated 19M barrels a- day, and was

instead about 19.5 million barrels. The service said this high level of output was likely to continue this month.

This will add to pressures within an already divided OPEC, which is scheduled to meet this month to agree on individual quotas.. The quotas are meant to reduce total OPEC output to 17.6 M barrels.

Despite optimistic statements from OPEC members that such reductions may be achieved, the market appears to be betting that real production cuts will be some time away.