Saudi Stockpiling Rumors Sharply Depress Oil Prices
Oil prices fell Wednesday in moderate trading, pushed lower by reports that Saudi Arabia has again started storing large quantities of crude oil in offshore tankers.
Futures prices for crude oil declined, while heating oil futures lost more than a penny a gallon.
On the New York Mercantile Exchange, futures contracts for March delivery of West Texas Intermediate, the U.S. benchmark crude, finished at $16.71 per 42-gallon barrel, down 33 cents from Tuesday’s close.
Wholesale heating oil for February delivery dropped 1.03 cents to 48.73 cents a gallon, while wholesale unleaded gasoline fell 0.41 cent to 45.03 cents a gallon.
“There was nothing of substance on the plus side,” said Bob Baker, an oil analyst for Prudential-Bache Securities. “This market is tired.”
Pressuring prices on the minus side, analysts said, were unconfirmed reports Wednesday that Saudi Arabia, the world’s biggest oil exporter, has resumed a dormant program to stockpile crude in tankers. Oil market insiders fear that the Saudis could unleash the oil spontaneously and flood the world market.
The tankers being used by the Saudis have an estimated storage capacity of around 10 million barrels, according to the reports.
“It’s a threat out there,” Baker said.
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