Oil Surges

Crude oil rose 13 percent in New York after a U.S. government report showed an unexpected drop in inventories as imports declined.
TradingEconomics.com, Bloomberg 2/19/2009 12:28:13 PM

Supplies fell 138,000 barrels to 350.6 million barrels last week, the first decline this year, the Energy Department said today in a weekly report. Stockpiles were forecast to increase by 3.2 million barrels, according to a Bloomberg News survey. The Organization of Petroleum Exporting Countries agreed to three supply cuts in 2008 to halt sliding prices.

Crude oil for March delivery rose $4.53, or 13 percent, to $39.15 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices are down 12 percent this year. Futures rose as much as $5.23 a barrel to $39.85.

The March contract expires tomorrow. The more-active April contract increased $2.44, or 6.5 percent, to $39.85 a barrel.

Imports of crude oil declined 859,000 barrels a day to 8.79 million, the lowest since September, when ports were shut in the aftermath of hurricanes Gustav and Ike, the report showed.

Supplies at Cushing, Oklahoma, where New York-traded West Texas Intermediate crude is delivered, declined 52,000 barrels to 34.9 million barrels, the report showed. Inventories in the week ended Feb. 6 were the highest since at least April 2004, when the department began keeping records for the location.

The price of oil for delivery in April is 70 cents a barrel higher than for March, down from a $2.79 premium yesterday. The spread between the first- and second-month contracts is the lowest this year. December futures are $10.05 higher than the front-month contract, versus $12.11 yesterday.

Stockpiles of distillate fuel, a category that includes heating oil and diesel, dropped 813,000 barrels to 140.8 million, the department said. A 1.5 million-barrel drop was forecast, according to the median of responses by 16 analysts in the Bloomberg News survey.

Gasoline inventories rose 1.11 million barrels to 218.7 million barrels, the department said. Stockpiles were forecast to fall by 500,000 barrels.

U.S. motorists cut back on driving for a record 14th consecutive month in December, capping a 2008 drop that was the steepest in the 66 years the government has complied the figures, the Federal Highway Administration said in a report today.

Vehicle miles traveled fell by 3.8 billion during the month, or 1.6 percent, from a year earlier, the FHA said. The total for all of last year fell by 107.9 billion, or 3.6 percent.

OPEC cut oil production by 3.5 percent in January, according to a Bloomberg News survey. Members with output quotas, all except Iraq, pumped 26.2 million barrels a day, 1.355 million more than their target of 24.845 million barrels a day.

The group will load 22.8 million barrels a day in the month ending March 7, down from 23.5 million a day in the month ended Feb. 7, Oil Movements said in a report today. It’s the lowest volume since February 2004, according to the Halifax, England- based tanker tracker.

Oil also climbed as the euro strengthened against the U.S. currency on speculation that Europe will take steps to address the financial crisis. Investors purchased commodities as a store of value.

Brent crude oil for April settlement increased $2.35, or 5.9 percent, to $41.90 a barrel on London’s ICE Futures Europe exchange. Futures touched $39.35 yesterday, the lowest this year.