By OGJ editors
HOUSTON, May 22 -- Oil futures prices plummeted Tuesday on the New York Mercantile Exchange amid rumors that Venezuela's oil production was exceeding the quota set by the Organization of Petroleum Exporting Countries.
Alvaro Silva, Venezuela's oil minister, later denied those rumors, but by then the damage was done, said analysts. They said traders also were concerned about the scheduled June meeting of OPEC ministers and increased oil exports from Norway and Russia.
The June contract for benchmark US light, sweet crudes plunged $1 to $27.33/bbl on NYMEX, while the July contract dropped 80¢ to $26.43/bbl. Results were mixed in after-hours electronic trading, with the July position trading in a range of $26.15-26.65/bbl and the August contract at $26.48/bbl, up slightly from its closing price of $26.41/bbl.
Following the close of NYMEX trading late Tuesday, the American Petroleum Institute reported US oil inventories increased by 5.6 million bbl last week. It also said US gasoline stocks dropped by 1.1 million bbl, while distillate inventories were down by 135,000 bbl in the same period.
The unexpected jump in oil stocks will likely override the unanticipated decline in gasoline inventories in subsequent trading, analysts predicted.
During the regular NYMEX session Tuesday, heating oil for June delivery fell 2.22¢ to 66.77¢/gal. Unleaded gasoline for the same month dropped 2.2¢ to 78.44¢/gal. The June natural gas contract lost 9.5¢ to $3.40/Mcf.
In London, futures prices for North Sea Brent oil fell through support at $26/bbl in anticipation of a bearish report of US oil inventories. The July Brent contract lost 78¢ to $25.62/bbl on the International Petroleum Exchange.
Refined products will likely drive the oil market in coming months, and inventory data will be critical, said analysts.
The June natural gas contract dipped 1¢ to the equivalent of $1.74/Mcf on IPE.
The average price for OPEC's basket of seven benchmark crudes fell 79¢ to $24.17/bbl Tuesday.