Crude oil led a decline in petroleum futures prices Thursday in heavy trading on the New York Mercantile Exchange amid growing concern that Saudi Arabia might be stepping up production at lower prices.
However, a report released after the close of trading disclosed that a shortage of heating oil might be looming, a development that could prompt a rally in heating oil futures today.
Selling in crude oil futures was encouraged by reports that Saudi Arabia has agreed to sell crude at reduced prices, said Andrew Lebow, a petroleum analyst with Shearson Lehman Bros. Such reports have been circulating for several days but haven't had much impact on prices because they haven't been confirmed.
"More people are starting to believe it," said Peter Beutel, a petroleum analyst with Rudolf Wolff Energy.
Pressure could be short-lived, however, analysts said, because of the report on oil inventories released by the American Petroleum Institute after the close of trading.
The API said that domestic stocks of distillates, which include heating oil, declined by 3.4 million barrels in the week ended last Friday. Analysts said distillate stocks usually increase at this time of year.