Prices on the world oil "spot" market have dropped steadily since the first of June, despite widespread expectation that the oil cartel will raise its rates again next week.
The significance of the break in th spot market - the first sustained price dropes since February - is subject to differing interpretations by government and private experts.
Some said the decline could be the result of "buyer resistance," others said it might be due to a "temporary surplus" and still others said supply and demand in the international market might be moving slowly toward equilibrium.
Spot prices, set in Rotterdam, are for cargoes of crude or oil products sold on a one-time basis, rather than under a long-term contract, and rise and fall depending on market conditions.
Since Iran shut off its oil exports during January and February, spot prices have climbed far above the Organization of Petroleum Exporting Countries' official prices. This has alarmed the consuming countries because low spot prices are a principal deterrent to further OPEC increases.
Gasoline prices peaked on the spot market at $52.17 for a 42-gallon barrel June 1 and have continued to drop, to about $43.25 Tuesday. Heating oil prices likewise have fallen from $51.34 at the first of the month to about $45.80 when the market closed Tuesday.
In recent years spot prices have tended to rise, not fall, before the quarterly OPEC meetings such as the one next Tuesday in Geneva, at which official price boosts have been anticipated. What is also odd, in the view of some analysts, is that even though spot market prices have declinced, the spot market volume is about 8 percent of the Free World's oil, more than twice the level before the Iranian squeeze.
And in fact U.S. oil imports, always a major ingredient in prices, have increased over the last three weeks.
Walter J. Levy, a respected international petroleum consultant based in New York, said he was "hesitant to draw conclusions," adding that prices could be dropping because "there could be a temporary surplus or buyer resistance."
John Buckley, vice president of Northeast Petroleum, said that some oil brokers have had difficulty finding U.S. Gulf Coast buyers for high-priced cargoes of crude oil and products purchased abroad. Buckley also expressed some surprise that the European price for crude oil, which had peaked at nearly $37 a barrel in recent weeks, had dropped to about $32.75 last Monday.
Elsewhere there were stories in some oil circles of traders and some oil companies losing millions of dollars on cargoes for which they simply could not find buyers.
Standard Oil Co. of Indiana chief economist Ted Eck said current market conditions might mean "the end of $35-a-barrel crude oil for a while. I wouldn't be surprised to see some lower prices." As for reasons for the drop, Eck said, "A lot of people could be waiting to see if the Saudis increase oil production by 1 million barrels a day."
Still another factor, Eck said, is that "a lot of economies around the world are starting to slow down, which lowers demand."
One senior Energy Department official yesterday expressed perplexity over the falling trend in spot prices.
"One possibility very clearly is that there could be enough supplies building up in the pipeline, still another possibility is that we are seeing a lot of new price resistance from buyers," he said.
The Energy Department has estimated the range of the world oil shortage as from 1.6 million barrels a day to 2 million barrels a day out of total daily consumption of about 54 million barrels a day.