Supplies have gained in 18 of the past 20 weeks, leaving stockpiles the highest since July 2007, the Energy Department said. World oil consumption will drop 1.7 percent to 84.3 million barrels a day this year, consultant Wood Mackenzie said in a report today. The Energy Department and International Energy Agency cut their demand forecasts earlier this week.
Crude oil for March delivery fell $1.97, or 5.5 percent, to $33.97 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $33.85, the lowest since Jan. 20. Oil is down 24 percent this year and 63 percent from a year ago.
The discount of West Texas Intermediate, the grade that’s traded in New York, to London’s Brent widened to the most since Jan. 16 after Royal Dutch Shell Plc said it may miss deliveries of oil from Nigeria because of security concerns.
Brent crude oil for March settlement rose 27 cents, or 0.6 percent, to $44.55 a barrel on London’s ICE Futures Europe exchange. Brent futures were trading at a $10.58 premium over oil in New York.
Supplies at Cushing, Oklahoma, where West Texas Intermediate oil 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.
Prices for delivery in future months are higher than for earlier ones, a situation known as contango, allowing buyers to profit from hoarding oil. The price of oil for delivery in April is $8.16 a barrel higher than for March. December futures are up $19.55 from the front month.
Futures touched $32.40 on Dec. 20, the lowest since February 2004. Traders rushed to sell January futures on that date because the contract expired at the end of the session. The March contract will expire on Feb. 20.
The International Energy Agency yesterday reduced its global oil demand forecast for 2009, projecting consumption will decline by 1 million barrels a day, the biggest drop since 1982. The adviser to 28 developed nations trimmed its 2009 forecast by 570,000 barrels to 84.7 million a day because of a weaker economic outlook from the International Monetary Fund.
President Barack Obama’s stimulus plan will be insufficient to avert the biggest U.S. economic decline since 1946 as consumer spending posts its longest slide on record, according to a monthly Bloomberg News survey. The world’s largest economy will contract 2 percent this year, half a percentage point more than last month’s forecast, according to the survey.
The Organization of Petroleum Exporting Countries will cut shipments by 3.5 percent in February, the biggest monthly drop in at least five years, as the group implements a record production reduction to bolster prices, according to tanker-tracker Oil Movements.
Gasoline supplies fell as refineries shut units last week. Plants operated at 81.6 percent of capacity, down 1.9 percentage points from the prior week, and the lowest since the period ended Oct. 3 when the Gulf Coast was recovering from hurricanes Gustav and Ike, yesterday’s Energy Department report showed.
Gasoline futures for March delivery declined 1.23 cents, or 1 percent, to $1.2575 a gallon in New York.