NEW YORK — Crude oil futures plunged Friday as traders acted on fears of a glut stemming from contingency plans to replace suspended Iraqi exports, analysts said.
January crude futures fell $1.80 to $32.02 a barrel at the New York Mercantile Exchange, the lowest level in five weeks.
The contract reached a high of $34.15 in early trade, propelled by reports that Iraq had halted its exports of 2.3 million barrels a day in an oil pricing dispute with the United Nations. U.N. officials confirmed later Friday that Iraq had halted exports.
Prices skidded, however, as speculators large and small sold, fearing that releases from strategic petroleum reserves and Saudi Arabia's turning on its taps may overwhelm the market.
"We are working with International Energy Agency members and major oil producers on an oil supply response which, if needed, would more than compensate for the oil volumes which Iraq is threatening to withdraw from the world market," said J.P. Crowley, U.N. National Security Council spokesman.
Easing concerns over supply tightness in the U.S. also contributed to the plunging price.
"The tide has turned fundamentally with crude," said John Kilduff, senior vice president at Fimat USA Inc., a brokerage firm. "We've had good stock builds recently in the U.S., making progress toward 300 million barrels."
Total stocks stood at about 292 million barrels for the week ended Nov. 24, just shy of the 300 million widely regarded as a safe cushion.
"As the calendar grinds on and heating oil stocks build, that (explains) the whole diminution of supply fears and the high prices they engender," Kilduff said.
For now, it seems that assurances by IEA executive director Robert Priddle and U.S. Energy Secretary Bill Richardson that they would act quickly to release crude oil from strategic reserves, and Saudi Arabia's pledge to step up production if necessary assuaged market jitters.