Oil price falls

Press, 7 October 1988, Page 12

Oil price falls

NZPA-Reuter New York Excess production by the Organisation of Petroleum Exporting Countries (0.P.E.C.) drove oil under SUSI 3 a barrel and raised the possibility of a price crash matching the one in 1986, oil analysts and traders said. “There is a chance prices could drop to the 1986 low of $U59.75 a barrel unless there is a significant drop in O.P.E.C. production,” said Mr Andrew Lebow, analyst at E.D. and F. Man International Futures, Inc. . The U.S. benchmark crude West Texas intermediate ended at $U512.60 on the New York mercantile exchange on Tuesday (early yesterday, N.Z. time), off US47c. The last time prices were at Wednesday’s level was on August 1, 1986. World oil supplies in the

third quarter of 1988 reached 50.6 million barrels a day (bpd), the highest level since the first quarter of 1980, the International Energy Agency said. A Reuter survey showed that eleven of O.P.E.C.’s 13 members exceeded quotas. The excess output may be showing up in U.S. oil inventories, which,' according to the American Petroleum Institute, jumped 5.3 M barrels last week, traders said. Another indication of increasing O.P.E.C. supplies was a report that Exxon Corporation has chartered eight to 10 tankers to carry crude oil from the Persian Gulf, they said. Norwegian Oil Minister, Mr Arne Oeien, said Norway would probably drop its production curbs in support of O.P.E.C. if the cartel did not restore internal order.