Oil Futures Sharply Lower

Petroleum futures prices, thought to be poised for another rally, instead turned sharply lower Tuesday on the New York Mercantile Exchange.

“All the indications pointed to another strong day,” said Nauman Barakat, an analyst for Smith Barney, Harris Upham & Co. in New York. “But prices failed to break through a resistance level and the collapse began.”

Barakat said the sell-off was not completely inspired by technical factors. Reports that Saudi Arabia recently delivered half a million gallons of gasoline to U.S. customers may be a sign that the Saudis are attempting to circumvent the OPEC price structure on crude products by directly marketing refined products, he said.

Adding to the decline were moderating temperatures in Western Europe, where bitterly cold temperatures had been forecast, he said.

Norway, which is reportedly considering raising the price of its crude by $1 a barrel, also contributed to the price decline by taking no action Tuesday, Barakat said.