Oil climbed more than 4 percent as equities rebounded after the Standard & Poor’s 500 Index sank 3.5 percent yesterday. Prices have dropped 73 percent from a record $147.27 on July 11 as the U.S., Europe and Japan face a simultaneous recession that’s cut fuel demand. A government report tomorrow may show that supplies gained last week, a Bloomberg News survey showed.
Crude oil for April delivery rose $1.42, or 3.7 percent, to $39.86 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices, which are down 11 percent this year, have dropped 60 percent from a year ago.
The Organization of Petroleum Exporting Countries, the U.S. Energy Department and International Energy Agency cut their demand forecasts this month because of the economic contraction.
Inventories probably gained 1.25 million barrels last week, according to the median of 14 analyst responses in a Bloomberg News survey. Supplies fell 138,000 barrels in the week ended Feb. 13, the first decline so far this year. The Energy Department will release its weekly report tomorrow at 10:30 a.m. in Washington.
The price of oil for delivery in May is $2.77 a barrel higher than for April. December futures are $9.81 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 and 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 barrels in the week ended Feb. 13, according to the Energy Department. 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 high inventories at Cushing have depressed the West Texas price so that Brent crude oil traded in London is at a premium to the U.S. grade.
Brent crude oil for April settlement increased $1.35, or 3.3 percent, to $42.34 a barrel on London’s ICE Futures Europe exchange.
Gasoline futures for March delivery increased 3.67 cents, or 3.5 percent, to $1.08 a gallon in New York. Heating oil for March delivery rose 3.11 cents, or 2.7 percent, to $1.2065 a gallon.
The average U.S. pump price for regular gasoline dropped 1 cent to $1.90 a gallon yesterday, AAA, the nation’s largest motorist organization, said on its Web site yesterday. Prices have declined 54 percent from the record $4.114 a gallon reached in July.