Increased supplies and uncertain demand caused gasoline futures prices to fall sharply Thursday. "The refineries are continuing to increase production," said Andrew Lebow, an analyst in New York with Shearson Lehman Bros. "But I think they've overdone it." Some gasoline contracts were down the 2-cent limit for daily trading before the losers were trimmed.
Data released by the American Petroleum Institute on Wednesday shows a 2.8 million barrel buildup in gasoline supplies. Refineries processed 13.5 million barrels of crude oil during the week ended May 23, a level of production last seen in 1981.
The increased production has been in response to good demand in March and April and expectations that it will continue through the summer. The latest API figures did not include Memorial Day weekend, which analysts believe will give the best clue so far about the level of summer driving.
Crude oil settled 7 cents higher to 29 cents lower at the New York Mercantile Exchange, with the July contract at $14.54 a barrel; heating oil was 0.13 cent higher to 0.45 cent lower, with June at 42.30 cents a gallon, and leaded gasoline was 0.95 cent to 1.94 cents lower with June at 50 cents a gallon.