Commodities : Monday, Jan. 20, 1986 : Petroleum Futures Plunge

Petroleum futures prices plunged in a “selling panic” Monday largely because of an over-abundance of supply.

Crude oil slumped the $1-a-barrel limit for daily trading on the New York Mercantile Exchange. The contract for delivery in February, for which there is no limit, settled $2.26 lower.

“The market dropped as much in one day as it did all last week, and last week was one of the worst I remember,” said Peter Beutel, an analyst in New York with Rudolf Wolff Energy.

Heating oil and leaded gasoline sank the 2-cent-a-gallon limit on all contracts except the nearby February deliveries, which plunged more than twice that amount.

“There’s just an abundance of product in Europe and New York harbor,” said Ed Dellamonte, an analyst in New York with Prudential-Bache Securities.

“That and an accumulation of other factors is just beating the market to death.”

“Too much production, netbacks (a marketing tool similar to rebates), demand’s not all that great, its warm here and in Europe --they’re just leaning very, very heavily on the market,” Dellamonte said.