Commodities : Wednesday, July 2, 1986 : Crude Oil Futures Slump

Crude oil futures slumped below $12 a barrel Wednesday in a market without visible support. Weekly industry data, released late Tuesday, failed to overcome the downward trend that brought oil futures to their lowest level since mid-April.

Gasoline demand increased and fuel stocks went down, according to the American Petroleum Institute, but refinery runs of crude oil are a million barrels a day above a year ago, with capacity increasing during the week from 87.1% to 87.6%.

“There are a lot of negative factors out there and the increase in refinery runs was disappointing,” said Nauman Barakat, an analyst in New York with Smith Barney, Harris Upham & Co.

Volume was on the light side but the selling pressure persisted.

“A lot of people were looking for short covering (buying to offset previous sales),” said Peter Beutel, an analyst in New York with Rudolf Wolff Energy. “But it didn’t develop. There was just uninterrupted selling.”

With the failure of the Organization of Petroleum Exporting Countries to limit crude oil production and no help from the API data, “it looks like the market is predestined to go back and test $10 a barrel or lower,” he said.