Oil fell as much as much as 4.4 percent after a government report showed that U.S. consumer spending fell in December for a record sixth consecutive month. Gasoline and heating-oil futures tumbled because U.S. refiners and the United Steelworkers union extended negotiations on a new contract over the weekend, delaying a potential strike.
Crude oil for March delivery fell $1.63, or 3.9 percent, to $40.05 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $39.83, the lowest since Jan. 20. Prices are down 10 percent this year and are 55 percent lower than a year ago.
Gasoline futures for March delivery declined 11.72 cents, or 9.2 percent, to $1.1515 a gallon in New York. Heating oil for March fell 8.95 cents, or 6.2 percent, to $1.3445 a gallon.
The United Steelworkers union didn’t receive a new proposal from Royal Dutch Shell Plc yesterday, Lynne Baker, the union spokeswoman, said.
The 1 percent drop in consumer purchases was larger than forecast and followed a 0.8 percent decrease in November, the Commerce Department said today in Washington. The Institute for Supply Management’s factory index was 35.6 in January. Readings less than 50 signal a contraction and the measure has been below that level since February 2008.
The negotiations cover workers at 86 plants including operations owned by Exxon Mobil Corp., Valero Energy Corp., BP Plc and Chevron Corp. as well as Shell. The contract extension was agreed to late Jan. 31 in Austin, Texas, where the talks started Jan. 20.
The price of oil for delivery in April is $3.84 a barrel higher than for March, up from a $2.76 premium on Jan. 26. January futures are up $13.29 from the front month, versus $10.13 on Jan. 26. This structure, in which the future month’s price is higher than the one before it, is known as contango, and is often an indicator of oversupply.
Hedge-fund managers and other large speculators increased their net-long position in New York crude-oil futures in the week ended Jan. 27, according to U.S. Commodity Futures Trading Commission data.
Speculative long positions, or bets prices will rise, outnumbered short positions by 51,652 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitment of Traders Report. Net-long positions rose by 5,518 acts, or 12 percent, from a week earlier.
Brent crude oil for March settlement declined $2.07, or 4.5 percent, to $43.81 a barrel on London’s ICE Futures Europe exchange.