Wednesday, July 9, 1986 : Oil Falls Below $11 a Barrel

Oil futures prices plunged below $11 a barrel on Wednesday and oil products hit lows not seen since trading in the products began on the New York Mercantile Exchange in the late 1970s.

“Another disastrous day,” said Nauman Barakat, an analyst in New York with Smith Barney, Harris Upham & Co.

“It’s the continued fallout from the disappointing OPEC meeting and the perception that OPEC again will not come to any material agreement when they meet on July 28,” he said.

The Organization of Petroleum Exporting Countries failed last month to come up with an agreement to limit production and raise prices.

“This market is weak from the cradle to the grave,” said analyst Peter Beutel, with Elders Futures Inc. in New York.

Crude oil crashed to $10.45 a barrel, leaded gasoline to 33.95 cents a gallon and heating oil to 31.78 cents a gallon. These were the lowest product prices of the decade for the nearby delivery month at the New York Mercantile Exchange.

Barakat said there were rumors that Saudi Arabia sold crude oil as low as $7 a barrel on a netback deal, in which the price of crude is tied to the ultimate price of the refined product.