Commodities : Thursday, Oct. 10, 1985 : Petroleum Futures Tumble

Petroleum futures prices sold off sharply in heavy trading Thursday on the New York Mercantile Exchange, partly because delivery problems in Europe left dealers with supplies they could not sell.

Prices had fallen Wednesday, and analysts said some of the selling Thursday came from speculators who had bought contracts earlier in anticipation of a rally and were getting out of the market.

The decline appeared to begin in Europe, said Jim Ritterbusch, a petroleum analyst with Paine Webber, as supplies of fuel oil began to increase while demand remained flat.

Early selling approached panic proportions, said Rich Kane, an oil trader with Merrill Lynch Futures.

Kane said shipping problems on the Rhine River left suppliers holding several cargoes of oil in Rotterdam that could not be sold. As a result, they sold contracts on the futures exchange to hedge the product they were holding, he said.

Several major American oil companies also were selling West Texas crude oil, analysts said, and buying Saudi Arabian oil that is priced more cheaply under that country’s recently announced “net-back” system, which ties the price of crude to prices of refined products.