Crude Oil Prices Hover Below $10 a Barrel on Some Markets

Crude oil prices on some world markets Thursday hovered below $10 a barrel--the lowest level in 12 years--although later in the day they recovered somewhat in trading in New York.

High-quality Brent crude from the North Sea was traded in Rotterdam at $9.70 on Thursday, compared to $9.65 on Wednesday. In London, a barrel fetched $9.50 at midday, traders said, then closed at $9.65.

Novok, the Rotterdam-based organization of Dutch oil traders, predicted that Brent oil would slide further to between $8 and $10 over the next two months before a production bottleneck would force it up again to $10 to $12 a barrel.

Experts said the main reason for the recent significant drop in prices was the continuing oil glut on the world market. A meeting of the Organization of Petroleum Exporting Countries in Yugoslavia last month failed to reach agreement on a plan to stabilize the cartel’s production.

Meanwhile, prices in New York advanced, even though a new report showed that American refineries scaled back production last week. On the New York Mercantile Exchange, contracts for August delivery of oil rose by 7 cents to 48 cents from Wednesday to $11.25 a barrel.

Despite the rise, “the market is still fairly negative,” said Richard Marose, an analyst in Chicago with Geldermann Inc. “At the core of the world oil situation,” he said, “is OPEC wanting to achieve higher prices but producing more and more oil.”

Industry data released late Wednesday indicates that American refineries reversed the pattern of recent weeks and geared down their operations during the week ended July 4. The American Petroleum Institute said the refineries were operating at 83% of capacity, down from 87.6% in the previous week.

Stocks of gasoline and crude oil also declined, but this was regarded as essentially neutral in trading at the New York Merc, analysts said.

“This could be a signal that we have reached a turning point after a seven-week down cycle in oil prices,” one analyst said.