Oil Set for Biggest Weekly Drop in Month

Crude traded little changed, set for the biggest weekly decline in a month, after the International Energy Agency said demand will fall for a second year, the first back-to-back contraction since 1983.
TradingEconomics.com, Bloomberg 1/16/2009 6:01:31 AM

The adviser to 28 nations cut its 2009 forecast by 1 million barrels a day on expectations the International Monetary Fund will lower its economic growth outlook. The IEA estimates global consumption will shrink 0.6 percent to 85.3 million barrels a day.

Crude oil for February delivery traded up 9 cents at $35.14 a barrel on the New York Mercantile Exchange at 1:46 p.m. London time.

The contract expires on Jan. 20. Yesterday, futures dropped 5 percent to $35.40 a barrel, the lowest settlement since Dec. 24. Prices have fallen 13 percent this week and declined 20 percent this year.

The more-active March contract was at $43.44 a barrel, down 10 cents, at 1:47 p.m. in London.

The Organization of Petroleum Exporting Countries yesterday shaved its global demand estimate for 2009 by 20,000 barrels to 85.66 million barrels a day. That brings this year’s reduction to 180,000 barrels a day, or 0.2 percent.

Brent crude oil for March settlement was at $48.18 a barrel, up 50 cents, at 1:47 p.m. local time on London’s ICE Futures Europe exchange. The February contract expired yesterday at $44.69 a barrel.

Crude-oil inventories at Cushing, Oklahoma, where West Texas Intermediate traded on the Nymex is stored, climbed 2.5 percent to 33 million barrels last week, the Energy Department said this week. It was the highest since at least April 2004, when the department began keeping records for the location.

U.S. fuel demand fell 6 percent last year, the biggest drop since 1980, as prices touched records and the economy contracted, the industry-funded American Petroleum Institute said yesterday.

U.S. crude stockpiles increased 1.14 million barrels to 326.6 million barrels last week, the highest since Aug. 31, 2007, the Energy Department said Jan. 14. Gasoline and distillate fuel supplies also rose.

Oil may fall further next week as traders try to profit from the price differentials between the prompt New York crude future and later months and store more supplies.