World oil prices fell again Wednesday as traders took profits from Tuesday's rebound in the face of numerous reports that Saudi Arabia is still determined to increase its crude production soon.
The resulting drop in prices also triggered some technical selling.
The August contract for benchmark light, sweet crude on the New York Mercantile Exchange fell 52� to $31.52/bbl Wednesday, while the September contract dropped 29� to $30.35/bbl. Both contracts continued to decline in after-hours trading, to $31.15/bbl and $30.15/bbl respectively.
The August contract for home heating oil was down 0.45� to 80.1�/gal, while unleaded gasoline dropped 0.5� to 97.64�/gal.
Natural gas for August delivery lost 16� to $3.88/Mcf on the NYMEX.
In London, speculation on increased Saudi production resulted in nervous selling on the International Petroleum Exchange. The September contract for North Sea Brent oil dropped 44� to close at $28.88/bbl.
The August contract for natural gas also lost 3� to the equivalent of $2.71/Mcf.
However, brokers said the market remained technically and fundamentally firm. They said additional substantial declines in futures prices are unlikely, unless there is a significant increase in oil production.
The price of North Sea Brent crude oil slipped below $29/bbl on the Singapore exchange as well. As the day ended, Brent for September was down to $28.88/bbl, off 44�, while the October contract was down by 29� to $28.53.
The Saudis proposed boosting production by 500,000 b/d in order to drive world oil prices below a level that might encourage domestic exploration by the United States and other non-OPEC producers, or spark development of alternative energy resources.
Unwilling to let Saudi Arabia have all of that market increase, Ali Rodriguez Araque, conference president for the Organization of Petroleum Exporting Countries, announced Monday that the whole cartel would hike production by that amount, probably this month.
But that proposal derailed when a market knee-jerk sent oil prices tumbling below OPEC's trigger-level of $28/bbl on Tuesday.
Other sources report the Saudis are still adamant about increasing production, starting with a hike of 250,000 b/d in August.
Saudi Arabia is OPEC's biggest producer, accounting for almost a third of the group's output. With some of the biggest oil reserves in the world that will keep that kingdom at the forefront of production for years to come, the Saudis are anxious to protect future business by keeping crude prices low to eliminate competition.