Price of Oil Skids to $18.90 a Barrel : Decline Blamed on Reports of Overproduction by OPEC

Oil prices plummeted again Friday, closing out a week of heavy losses with crude futures contracts sinking below $19 a barrel to their lowest level in more than three months.

Analysts blamed the plunge mainly on market gloom over reports that members of the Organization of Petroleum Exporting Countries have increased their production to levels the world’s consuming nations cannot absorb.

“There’s no indication we’re going to be seeing any cutbacks by OPEC, and the market is losing some confidence here,” said Andrew Lebow, an analyst at the Shearson Lehman Bros. securities firm.

On the New York Mercantile Exchange, contracts for October delivery of West Texas Intermediate, the benchmark U.S. crude, settled at $18.90 per 42-gallon barrel. That was down 52 cents from Thursday’s final price for the September contract, which expired.

The last time crude settled below $19 a barrel was on May 4, when it closed at $18.92 a barrel.

On Monday, the September contract plunged 74 cents to $19.83 a barrel--the first time the near-month contract had closed below $20 since June 25, when it settled at $19.64 a barrel. It had peaked at $22.39 a barrel on July 17.

“The market is in a very unhealthy situation,” Lebow said. “First, sentiment is bearish. Second, there’s frustration with OPEC’s production, which is over 19 million barrels a day, compared to their quota of 16.6 million; and third, naval tensions in the Persian Gulf have moderated.”