Oil Futures Prices Fall to $16 Level in Heavy Trading

Oil futures prices tumbled more than $1 a barrel to the $16 level Tuesday, erasing gains of the previous session in what brokers called one of the most unpredictable and heavy days in trading history.

“Yesterday, nobody’s life was complete without it (oil), and today they couldn’t give it away,” said Peter C. Beutel, assistant manager of Rudolf Wolff Futures, a New York commodities firm.

The price for June delivery of West Texas Intermediate, the main U.S. grade of crude oil, fell to $16.04 for a 42-gallon barrel from $17.16 on the New York Mercantile.

On Tuesday, 48 million barrels were traded, about three times the daily U.S. consumption. Traders said it was one of the heaviest volumes in the history of the Merc, which began trading oil futures on March 31, 1983.

Gasoline futures also fell sharply. Unleaded fell to 53.50 cents a gallon from 55.75 cents, and regular declined to 53.51 cents from 55.76 cents a gallon.

Oil industry analysts were divided over the cause of the decline.

Many believe that the worldwide oversupply of oil that has caused oil prices to drop from nearly $32 a barrel will persist indefinitely, while others say producing nations may start reducing output later this year. Some also noted that the futures market has been enjoying a recovery recently.

“Basically, after a very prolonged decline, you normally have a recovery period, and often that recovery is very violent,” Beutel said.