Prices dropped as much as 6.2 percent after the Labor Department said payrolls fell by 598,000, the biggest monthly decline since December 1974. U.S. fuel consumption over the past four weeks averaged 19.5 million barrels a day, 2.8 percent lower than the same period last year, according to an Energy Department report on Feb. 4.
Crude oil for March delivery fell $1, or 2.4 percent, to $40.17 a barrel at 1:14 p.m. on the New York Mercantile Exchange. Futures touched $38.60, the lowest since Jan. 20. Oil is down 10 percent this year and 54 percent from a year ago.
Gasoline futures for March delivery dropped 2.63 cents, or 2.1 percent, to $1.2485 a gallon in New York. Heating oil declined 2.9 cents, or 2.1 percent, to $1.3382.
Oil futures in New York have traded between $38.60 and $42.31 this week as the recession in the U.S., Europe and Asia has led to layoffs and reduced spending.
U.S. crude-oil supplies increased 7.2 million barrels to 346.1 million last week, according to the Energy Department. Inventories have gained in 17 of the past 19 weeks, leaving stockpiles 15 percent higher than the five-year average for the period, the department said.
Supplies at Cushing, Oklahoma, where oil traded on Nymex is stored, climbed 2.5 percent to 34.3 million barrels last week, the highest since at least April 2004, when the department began keeping records for the location.
The price of oil for delivery in April is $5.12 a barrel higher than for March, up from a $3.99 premium yesterday. December futures are $14.79 higher than the front-month contract, versus $13.90 yesterday. 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.
The Organization of Petroleum Exporting Countries is implementing pledged production cuts and is committed to restoring balance to the market as the spreading recession reduces demand for oil, the group’s president said.
OPEC, which supplies more than 40 percent of the world’s oil, agreed to three supply cuts in 2008 to halt sliding prices as world oil demand heads for its second year of contraction. The last was agreed to on Dec. 17 and took effect Jan. 1. The group is scheduled to hold its next policy-setting ministerial meeting on March 15, in Vienna.
Brent crude oil for March settlement fell 43 cents, or 0.9 percent, to $46.03 a barrel on London’s ICE Futures Europe exchange. Brent futures traded at a $5.86 premium over West Texas Intermediate, the grade that’s traded in New York.