The spread between the two oil contracts closest to expiration surged to $8.19 yesterday, the biggest since Dec. 19. Oil also climbed as the House of Representatives passed a $787 billion stimulus plan designed to spur economic growth in the world’s biggest energy-consuming country.
Crude oil for March delivery rose $3.53, or 10 percent, to $37.51 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures rose as much as $4.27, or 13 percent, the biggest gain since Jan. 21. Prices, which are down 6.6 percent this week, have dropped 16 percent this year.
The price of oil for delivery in April is $4.35 a barrel higher than for March. December futures are up $14.91 from the front month, versus $19.89 yesterday. This structure, in which the future month’s price is higher than the one before it, is known as contango, allowing buyers to profit from hoarding oil.
Supplies at Cushing, Oklahoma, where West Texas Intermediate, the U.S. benchmark grade, is stored, climbed 1.7 percent to 34.9 million barrels last week, the Energy Department said on Feb. 11. It was the highest since at least April 2004, when the department began keeping records for the location.
The discount of March West Texas Intermediate, the grade that’s traded in New York, to London’s Brent futures contract nearest expiration narrowed to $7.52 a barrel today. The price of the U.S. benchmark has dropped in relation to other grades because of rising stockpiles at Cushing.
Brent crude oil for April settlement fell $1, or 2.2 percent, to $45.03 a barrel on London’s ICE Futures Europe exchange.
The Organization of Petroleum Exporting Countries cut its forecast for oil demand this year for a sixth straight month as the economic slump causes a sudden and massive” drop in consumption. OPEC’s estimate for 2009 global demand was lowered by 530,000 barrels a day to 85.13 million barrels a day, a monthly report showed today.
The International Energy Agency and U.S. Energy Department cut their global oil demand forecast for 2009 earlier this week.
U.S. motorists drove less in November, extending a drop in road travel into a second year and resulting in the longest continuous decline on record. Vehicle miles traveled fell by 12.9 billion miles, or 5.3 percent, from a year earlier, a Federal Highway Administration report showed on Jan. 22.