Oil futures were mostly lower Tuesday in hectic, record trading activity, breaking through a psychological price barrier and clearing the way for possible further declines.
"It's a very, very confused, nervous market," said Peter Beutel, an analyst in New York with Rudolf Wolff Energy.
While losses were trimmed near the close, the crude oil contract for delivery in February broke through the $20-a-barrel barrier, hit $19.85 and settled at $20.60. Only last Wednesday, the price was $25.15.
The March contract touched the $1.50-limit decline for daily trading on the New York Mercantile Exchange, where a record 42,637 crude oil contracts were traded.
"Psychologically this means that the market will work even lower," possibly to $15 or $16 in a month or so, said Nauman Barakat, an analyst in New York with Smith Barney, Harris Upham & Co. If the February crude price not only breaks through the $20 level, but settles there at the close, "a lot of traders will believe we left the 20s behind us," Beutel said.