Oil Price Under $60; Supplies Up

By Staff and Wire Reports

Oil prices sank below $60 a barrel Tuesday, and gasoline futures descended to their lowest price in almost a year as traders turned their attention to rising supplies and away from geopolitical tensions.

The third straight day of declining oil prices took a toll on the stock prices of energy producers and refiners, while giving a lift to shares of airlines and other fuel-dependent sectors.

Light sweet crude for March delivery fell $1.67 to settle at $59.57 a barrel on the New York Mercantile Exchange. That was the lowest close for front-month oil futures since Dec. 27.

In Tulsa, the price of a gallon of unleaded gasoline declined 2 cents at many retailers Tuesday evening to $2.09.

A month ago, a gallon of unleaded locally was $2.19. A year ago, the price was $1.79, according to AAA-Oklahoma.

Nationally, AAA said the average price of gasoline was down 5 cents a gallon from one week ago to $2.29. That was the lowest price since Jan. 6 when gasoline cost $2.27.

IFR Energy Services analyst Tim Evans said that “as (oil) prices drop toward the lower part of their recent range, we expect more than a glimmer of recognition that the downside for this market may be far more open than the average observer now believes.”

Evans sees technical support at $55.40 a barrel but says if that level is breached, crude futures could potentially fall to $40 a barrel.

The declines come as traders anticipate that the U.S. Energy Department’s weekly petroleum supply snapshot, due Wednesday, will likely show climbing oil supplies for the seventh straight week. Already, the nation’s commercial inventory of crude oil is nearly 11 percent above year-ago levels.

Traders are still concerned, albeit less so, about the international dispute over Iran’s nuclear activities and unrest in Nigeria.

The head of the International Energy Agency said Tuesday that its member governments could coordinate a release of strategic oil reserves that would offset any shutdown of Iranian crude output for up to 18 months.

“We have 4 billion barrels in strategic stocks,” Claude Mandil told Dow Jones Newswires. Even taking account lower estimates, he said, the IEA could keep oil supplies flowing for 18 months.

The IEA, the Paris-based energy watchdog, has reported falling demand because of high costs of crude.

Shares of independent refiners slid 3 percent on the New York Stock Exchange. Valero’s shares fell $1.04 to $49.55, while ConocoPhillips’ stock price shed 36 cents to $59.09.

The decline in fuel prices was seen as a positive for airlines, however. Shares of AMR Corp., the parent of American Airlines, rose 98 cents to $25.01 on the NYSE.

Natural gas futures fell 12.9 cents to settle at $7.114 per 1,000 cubic feet.

This story was written by the Associated Press, with additional reporting by the Tulsa World Business staff.