Oil Prices Continue to Slip While Tight Supplies Strengthen Unleaded Gasoline

Crude oil prices weakened further Tuesday in volatile trading, but unleaded gasoline strengthened because of tight supplies and speculation about higher U.S. demand.

On the New York Mercantile Exchange, the August delivery price of West Texas Intermediate, which fell sharply Monday to a 20-month low, ended 6 cents lower at $14.72 a barrel.

The last time prices for the near month contract were lower was Nov. 3, 1986, when prices closed at $14.71 a barrel.

At one point during trading Tuesday, crude oil contracts fell as much as 40 cents a barrel before rebounding and then falling again.

Oil traders attributed the behavior to nervousness about excessive supplies and fear that the Organization of Petroleum Exporting Countries will continue to out-produce demand, the same reason prices tumbled on Monday.

On the other hand, wholesale unleaded gasoline prices jumped 1.35 cents a gallon to 53.48 cents, recovering losses of a day earlier. Traders said they bid up prices on unleaded gasoline because of the high demand in summer and forecasts that U.S. consumption would continue rising.

“The gasoline market is a market unto itself,” said Richard Redoglio, a trader at Merrill Lynch Energy Futures in New York.