Top U.S. Oil Firms Cut Crude Price : Texaco, Exxon, Mobil Reductions Reflect Petroleum Glut

NEW YORK —  The nation’s top three oil companies on Friday cut the prices they pay for crude oil, reflecting the continuing glut in world petroleum supplies.

Texaco, Exxon and Mobil announced the reductions in the so-called posting price they offer for various grades, including West Texas Intermediate, the benchmark domestic crude.

Texaco and Exxon each shaved $1 off their previous price to $13. Mobil dropped its level by 50 cents to $12.75. Chevron U.S.A., a unit of Chevron, also lowered the price it pays for the benchmark crude by $1 to $13 a barrel.

The latest action followed similar moves by several other companies--including Shell Oil and Citgo Petroleum, earlier this week.

The reductions, at levels mostly between $12 and $13 a 42-gallon barrel, “are lower than the last lows in posted prices” reached several months ago, said Warren Shimmerlik, an analyst with Merrill Lynch.

“The world is awash in crude, the market is very weak and OPEC is overproducing,” he said. “And at the moment, the outlook is for no relief in sight.”

No Formula From OPEC

Last month, the 13-member Organization of Petroleum Exporting Countries failed again to come up with a formula to apportion a reduced overall output to jack up the price of crude.

Accordingly, industry analysts anticipated that the cartel’s effort to command a “fair market share”--which began late last year--will result in increased production by an average of 1 million to 2 million barrels a day by the end of this year.

Leading the trend of prices is the near-month futures contract for West Texas Intermediate being traded on the New York Mercantile Exchange.

Although trading in futures seldom results in actual exchanges of cash for “wet” oil, the prices reached in this market are generally seen as a guideline for real-life buying and selling between oil producers and refiners.

On Wednesday, contracts for August delivery settled at $10.77, dropping below $11 a barrel for the first time since March 31, when the equivalent contract closed at $10.42. The price recovered Thursday to $11.25 and remained slightly lower Friday.

Exxon is the nation’s largest oil company with 1985 revenue of $93.2 billion. Mobil was the second largest at $60.4 billion, while Texaco was third with $47.5 billion.