Oil Prices Skid on Saudi Report
Crude oil prices tumbled 86 cents a barrel to close below the $20 mark Tuesday after news that Saudi Arabia, the world’s biggest oil exporter, pushed up its output last month to take advantage of the recent boom market.
The leading June contract for West Texas Intermediate ended at $19.80 a barrel on the New York Mercantile Exchange, after a wave of selling as it broke through the $20 barrier. It was the lowest closing price for the benchmark grade in nearly a month.
Traders attributed the decline to a Reuters report quoting oil industry sources in the Persian Gulf that Saudi Arabia pumped 5.8 million barrels of oil daily from April 24 to April 30, well above its quota from the Organization of Petroleum Exporting Countries of 4.5 million barrels a day.
John H. O’Connell, an energy analyst at Refco Inc., said profit taking from the recent jump in crude and gasoline prices and concerns about OPEC overproduction largely were responsible for Tuesday’s selloff.
“There’s a growing belief that OPEC is producing 22 million barrels” daily, he said.
Saudi Arabia has denied that it is producing more than its monthly quota.
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