NEW YORK — U.S. oil prices sank below $16 a barrel Thursday to their lowest level this year, pressured by accelerating worries about overproduction, technical factors and a report showing larger-than-expected U.S. inventories, analysts said.
On the New York Mercantile Exchange, contracts for April delivery of West Texas Intermediate, the benchmark U.S. crude oil, closed at $15.92 per 42-gallon barrel, down 54 cents from Wednesday.
Prices for spot market cargoes of U.S. oil followed suit, falling to $15.93 a barrel, traders said.
It was the first time the near-month crude contract closed below $16 since Dec. 21, when it settled at $15.16.
Among March contracts for refined products, wholesale heating oil closed at 45.22 cents a gallon, down 1.18 cents from Wednesday, while wholesale unleaded gasoline settled at 45.37 cents a gallon, 0.98 cent lower.
William Byers, an analyst at Bear, Stearns & Co., said he believed that the "catalyst" of the decline was a federal Energy Information Administration report, issued Wednesday night, that showed U.S. crude inventories up by 8.5 million barrels last week.
OPEC Production Up
That figure, much greater than the 1.88 million-barrel increase cited Tuesday by the American Petroleum Institute, a Washington-based trade organization, shook the market, which was already edgy over continuing reports of growing oil production and inventories.
"OPEC is producing about 1 million barrels a day more than it was a month ago, and this perception is getting into the market--which isn't thrilled by it," said Peter Beutel, assistant director of the energy group at Elders Futures Inc.
Analysts also said technical factors pushed oil futures prices lower.
In particular, the market's confidence was shaken when the near-month crude contract broke below $16.37, "which had been seen as a very important support level," Beutel said.
Donald Morton, vice president for energy futures at the Boston office of Prudential-Bache Securities, said the market got off on a sour note when it picked up on overnight declining prices for North Sea Brent crude--the main European grade--on the London market.
"The general feeling, psychology in the market was already very weak, very negative," he said. "So it gave ground and just broke."
Other Products Weak
"It seemed like everyone lined up on the sell-side all day long," Morton added. "There weren't any new rumors. There weren't any new reasons. There weren't any new excuses. It was the same old reason: oversupply."
"There's been a sharp break in prices of crude and product coming on the heels of cumulative weakness," said Sanford Margoshes, an analyst at Shearson Lehman Hutton, referring to crude oil and its so-called refined products of gasoline and heating oil.