More Oil Firms Cut Contract Prices in U.S.
More oil companies, including giant Texaco, announced Monday that they had joined the latest round of cuts in the contract price for domestic crude, the kind of move that has led analysts to become more optimistic about the U.S. economic outlook.
Prices rebounded sharply from seven-year lows on the futures market for petroleum, however, as some members of the Organization of Petroleum Exporting Countries renewed efforts to persuade oil producers to prop up slumping prices by limiting output.
Texaco, the nation’s third-largest oil company, said it had cut the price that it will pay for West Texas Intermediate crude, the top domestic blend, by $1.50 a barrel to $20, effective last Friday. It was the seventh cut since the start of 1986, when Texaco was paying suppliers $27.75 a barrel.
Among smaller companies, new posted prices are even lower.
Contract Prices Less Volatile
Sun Co. announced a cut to $17 a barrel, Crown Central Petroleum went down to $16.50 and Coastal Corp. and Champlin Petroleum both dropped to $16. Prices paid by refiners for West Texas Intermediate now range from $15 to $21.60 a barrel, with the bigger companies at the high end of the scale.
Contract prices have fallen at a more subdued pace than crude oil traded in the futures market, where prices plummeted to $13.85 a barrel last week from $31.70 in November. On Monday, however, West Texas Intermediate for April delivery leaped $1.58 a barrel to close at $15.11.
In a related development, industry analysts said Saudi Arabia’s announcement Saturday that it will work to ensure that oil prices return to “acceptable levels” could start a modest recovery in the crude oil market after five weeks of almost daily declines.
The statement represented a considerable softening of Riyadh’s hitherto hard-line policy and indicated that the kingdom may at last be ready to cut its soaring production, which analysts blame for the halving of prices since November.
“It’s the first statement from the Saudis that has been anything but pugnacious,” said Mike Unsworth of the London brokerage Scott Goff Layton.
