Crude oil fell below $35 a barrel in New York on speculation a deepening recession in the U.S., Europe and Asia will reduce fuel demand.
Oil declined as much as 8.2 percent as stocks dropped on concern banks may face ratings downgrades and further losses as economies slow. Manufacturing in New York this month fell to the lowest level since records began in 2001, the Federal Reserve Bank of New York’s general economic index showed.
Crude oil for March delivery fell $2.59, or 6.9 percent, to $34.92 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices are down 22 percent this year. There was no floor trading yesterday because of the Presidents Day holiday, and electronic transactions will be booked for settlement today.
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 $3.44 a barrel higher than for March. December futures are up $13.51 from the front month.
An Energy Department report on Feb. 19 will probably show that U.S. crude oil inventories rose 1.8 million barrels last week, according to the median of seven analyst responses in a Bloomberg News survey. It would be the 19th gain in 21 weeks.
Gasoline stockpiles probably declined 300,000 barrels in the week ended Feb. 13, the survey showed. Supplies of distillate fuel, a category that includes heating oil and diesel, probably dropped 1.5 million barrels.
Gasoline futures for March delivery fell 9.35 cents, or 7.8 percent, to $1.1128 a gallon in New York. Heating oil for March delivery fell 11.4 cents, or 8.8 percent, to $1.186 a gallon. Futures touched $1.1815, the lowest since Jan. 3, 2005.
The average U.S. pump price for regular gasoline fell 0.5 cent to $1.96 a gallon, AAA, the nation’s largest motorist organization, said on its Web site today. Prices have declined 52 percent from the record $4.114 a gallon reached on July 17.
Brent crude oil for April settlement declined $2.38, or 5.5 percent, to $40.90 a barrel on London’s ICE Futures Europe exchange. Futures touched $40.70, the lowest since Dec. 31.