U.S. supplies jumped to highest since June 2007 last week, the Energy Department said. U.S. refiners operated at 81.6 percent of capacity, the lowest since October when the Gulf Coast was recovering from two hurricanes. New York Oil’s discount to London’s Brent widened to the most since Jan. 16 after Royal Dutch Shell Plc said it may miss deliveries of from Nigeria because of security concerns.
Crude oil for March delivery fell as much as 76 cents, or 2.1 percent, to $35.18 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $35.63 at 12:38 a.m. in London. Oil has declined 20 percent this year and dropped 62 percent from a year earlier.
Brent futures are at a premium of more than $9 over West Texas Intermediate, the grade that’s traded in New York, after news of the supply disruption in Nigeria. West African oil is priced in relation to Brent.
Shell issued a force majeure declaration, allowing it to suspend contractual sales obligations for reasons beyond its control, from Feb. 10 onwards, The Hague-based Shell spokesman Rainer Winzenried said in a phone interview today.
Brent crude oil for March settlement was at $44.69 a barrel, up 41 cents, on London’s ICE Futures Europe exchange at 12:32 p.m. London time. The contract expires today. The more- active April future was at $45.57 a barrel, up 25 cents, at 12:41 p.m. London time.
U.S. crude oil inventories have gained in 18 of the past 20 weeks, leaving stockpiles 16 percent higher than the five-year average for the period, the department said yesterday.
The price of oil for delivery in April is more than $6 a barrel higher than for March, up from $4.59 last week. December futures are more than $17 above the front month, compared with $13.90 last week.
Prices for delivery in future months are higher than for earlier ones, a situation known as contango, allowing buyers to profit from hoarding oil.
Supplies at Cushing, Oklahoma, where West Texas Intermediate oil traded on Nymex is stored, climbed 1.7 percent to 34.9 million barrels last week, the highest since at least April 2004, when the department began keeping records for the location.
Gasoline inventories fell 2.66 million barrels to 217.6 million, the biggest drop since September. A 500,000 barrel increase was forecast, according to the median of 15 analyst responses in the Bloomberg News survey.
Gasoline’s premium over the crude oil future’s prices, known as the crack spread, has surged to $17.58 a barrel, the highest level since July 2007. The four-week average of demand for the motor fuel has climbed by 68,000 barrels a day from the week ended Jan. 30.
The Organization of Petroleum Exporting Countries pumped 29 million barrels a day of crude in January, 950,000 barrels a day less than in December, as the cartel implemented announced supply cuts, the International Energy Agency said in its monthly report yesterday.