‘Exhausted’ Market Selloff Drops Oil Prices 25 Cents

Oil prices closed lower Friday after rising earlier in the session amid optimism that OPEC members could forge a production agreement.

On the New York Mercantile Exchange, October contracts for West Texas Intermediate, the benchmark U.S. crude, closed at $19.39 per 42-gallon barrel, down 25 cents from Thursday, when the contract rose 18 cents.

Prices for refined products also were mostly lower.

Analysts said prices opened higher on the expectation that the Organization of Petroleum Exporting Countries’ ministers would agree on steps to contain the cartel’s increasing overproduction. Technical factors also contributed to that upswing, they said.

But what analysts described as an exhausted market sold off later in the day.

OPEC President Rilwanu Lukman has said the cartel will move decisively to correct the production problems. Meetings of OPEC committees that monitor world oil prices and the cartel’s oil production have been put off three days until Sept. 10, but analysts said the market still expects some action to be taken.

The oil market views the meetings as a stabilizing factor because OPEC has been exceeding its self-imposed production quota of 16.6 million barrels a day. Some industry watchers say the daily surplus has reached 3 million barrels.

In recent weeks, the oil futures market has been turbulent as traders wavered between nervousness that growing overproduction by some OPEC members would push prices down and fears that a Persian Gulf confrontation might hamper supplies and drive prices higher.