The U.K. may face an economic contraction in the first quarter equal to last quarter’s 1.5 percent decline, the Bank of England said yesterday. Industrial energy consumption in Germany, Europe’s largest economy, grew less than expected last year. Japan, the world’s third-largest oil user, yesterday said its economy shrank the most since 1974 in the fourth quarter.
Crude oil for March delivery traded at $37.16 a barrel, down 0.9 percent from its close on Feb. 13, in electronic trading on the New York Mercantile Exchange at 11:58 a.m. in London. Floor trading was closed for the Presidents’ Day holiday in the U.S. and yesterday’s transactions will be booked today for settlement.
The March Nymex oil contract expires on Feb. 20. The more actively traded April contract was at $40.83 a barrel today, down $1.14 from last week’s close.
President Barack Obama today signs into law a $787 billion stimulus package of spending and tax cuts designed to revive the moribund economy. The U.S., the world’s largest oil consumer, has lost 3.6 million jobs since the recession started more than a year ago.
The price of oil for delivery in April is $3.67 a barrel higher than for March, the so-called prompt month contract, after reaching as much as $8.19 a barrel on Feb. 12. 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.
The build in supplies at Cushing, Oklahoma, where West Texas Intermediate, the U.S. benchmark grade, is stored, has contributed to the contango. Inventories there 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.
Brent crude for April settlement rose as much as 72 cents, or 1.7 percent, to $44 a barrel on London’s ICE Futures Europe exchange. It was at $43.54 a barrel at 11:47 a.m. London time.