U.S. crude inventories rose four times more than forecast to the highest since August 2007 as refineries cut operating rates, the Energy Department said yesterday. Recession in the world’s largest energy consumer has cut demand for heating and motor fuels. The U.K. economy shrank more than forecast during the fourth quarter, posting the biggest contraction since 1980.
Crude oil for March delivery fell as much as $1.74, or 4 percent, to $41.93 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $43.09 a barrel at 13:16 p.m. London time.
Prices are down 3.8 percent since the end of December and 51 percent lower than a year ago.
The Organization of Petroleum Exporting Countries will cut supplies by 5.4 percent this month to 26.15 million barrels a day, according to preliminary estimates from consultant PetroLogistics Ltd., following the group’s announcement last month of a record production cut in response to tumbling prices.
Brent crude oil for March settlement fell as much as $1.34, or 3 percent, to $44.05 a barrel on London’s ICE Futures Europe exchange.
Supplies of crude oil in the U.S. rose 6.1 million barrels to 332.7 million last week, the highest since August 2007, the Energy Department said yesterday. Stockpiles were forecast to climb by 1.4 million barrels by a Bloomberg News survey.
Fuel consumption in the U.S., the world’s biggest oil consumer, during the four weeks ended Jan. 16 averaged 19.4 million barrels a day, down 4.7 percent from a year earlier, the Energy Department report showed.
Supplies at Cushing, Oklahoma, where oil traded on Nymex is stored, climbed 0.7 percent to 33.2 million barrels last week, the highest since at least April 2004, when the department began keeping records for the location. Gasoline inventories increased 6.48 million barrels to 220 million. Refineries reduced operating rates, or runs, by 2 percentage points to 83.3 percent, the lowest for the week since 1991.
The price of oil for delivery in April is $2.53 higher than for March, and December futures are up $10.91 from the front month. This structure, in which the subsequent month’s price is higher than the one before it, is known as contango, and is often an indicator of oversupply.