OPEC, the U.S. Energy Department and the International Energy Agency cut their demand forecasts this month because of the recession. The 11 members with output quotas, all except Iraq, reduced output 3.8 percent to 25.3 million barrels a day in February, according to consultant PetroLogistics Ltd. of Geneva.
Crude oil for April delivery declined $1.54, or 3.9 percent, to $38.49 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices are down 14 percent this year.
Oil supply from 11 OPEC members will average 25.3 million barrels a day in February, down from 26.3 million barrels in January, Conrad Gerber, founder of PetroLogistics, said in an interview. Members have a quota of 24.845 million barrels a day.
Iran, Venezuela and Iraq said last week that OPEC is prepared to cut production again when it meets on March 15. The group agreed Dec. 17 on output constraints that would reduce supplies in January by 2.2 million barrels a day from December levels. That followed pledges to remove 2 million barrels a day in the fourth quarter of last year.
The price of oil for delivery in May is $2.83 a barrel higher than for March. December futures are $10.24 higher than the front-month contract. This structure, in which the future month’s price is higher than the one before it, is known as contango, allows buyers to profit from hoarding oil.
Crude oil supplies at Cushing, Oklahoma, where New York- traded West Texas Intermediate crude is delivered, declined 52,000 barrels to 34.9 million barrel in the week ended Feb. 13, an Energy Department report on Feb. 19 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.
U.S. crude-oil stockpiles increased 600,000 barrels last week, according to the median of seven analyst estimates before an Energy Department report this week. Analysts were split over whether gasoline supplies rose or declined. Stockpiles of distillate fuel, a category that includes heating oil and diesel, dropped 1.5 million barrels, according to the survey.
The department is scheduled to release its weekly report on Feb. 25 at 10:30 a.m. in Washington.
Gasoline futures for March delivery declined 2.96 cents, or 2.8 percent, to $1.045 a gallon in New York. Heating oil for March delivery dropped 2.37 cents, or 2 percent, to $1.173 a gallon.
The average U.S. pump price for regular gasoline fell 0.7 cents to $1.91 a gallon, AAA, the nation’s largest motorist organization, said on its Web site today. Prices have declined 54 percent from the record $4.114 a gallon reached on July 17.
Brent crude oil for April settlement declined $1.05, or 2.5 percent, to $40.84 a barrel on London’s ICE Futures Europe exchange.