Oil dropped as much as 5.6 percent after the government said the world’s biggest energy-consuming country lost 2.589 million jobs last year, the most since 1945. U.S. supplies have climbed in 13 of the past 15 weeks as the economy slowed, according to the Energy Department. Prices in New York touched $32.40 in December because of rising stockpiles and lower demand.
Crude oil for February delivery fell 88 cents, or 2.1 percent, to $40.82 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Oil is heading for a 12 percent decline this week after gaining 23 percent the week before, the most since August 1986.
The U.S. jobless rate rose more than forecast to 7.2 percent last month, a 15-year high, from 6.8 percent, according to a Labor Department report today in Washington.
Increased energy demand in Brazil, Russia, India and China, the so-called BRIC nations, was forecast to make up for declines in the U.S., Europe and Japan last year. Now declining crude prices are pushing Russia, the world’s biggest energy exporter, toward its first recession since 1998. Growth in the other BRIC nations may drop because of lower demand for their exports.
OPEC and the U.S. Energy Department estimate oil demand will fall this year, after slipping in 2008. The International Energy Agency expects an increase, forecasting a 440,000 barrel gain to 86.3 million barrels a day.
Deutsche Bank AG analysts, including Adam Sieminski in Washington and Michael Lewis in London, said oil consumption will fall 1 million barrels to 84.68 million barrels a day this year.
Deutsche Bank cut its average price of West Texas Intermediate crude oil, the U.S. benchmark, this quarter by $10 to $45 a barrel, in today’s report. The 2009 average for WTI was reduced to $45 a barrel from $47.50 in December.
Saudi Arabia sent notices to refiners in Japan and Taiwan that it was cutting shipments for February by 10 percent, said two refinery officials. OPEC agreed on Dec. 17 in Oran, Algeria, to curb supply by 9 percent starting Jan. 1 to 24.845 million barrels a day to bolster prices.
The Saudi move follows similar notification from members including Venezuela, Qatar, Iran, Kuwait and the United Arab Emirates. Saudi Arabia is the world’s biggest oil producer and the most influential member of the Organization of Petroleum Exporting Countries.
Brent crude oil for February settlement declined 4 cents to $44.63 a barrel on London’s ICE Futures Europe exchange.
Prices rose as high as $50.47 this week on concern that the conflict between Israel and Hamas in the Gaza Strip will disrupt Middle East supplies, and on speculation Russia’s natural-gas dispute with Ukraine will spur demand for oil-based fuels.
U.S. crude-oil stockpiles rose 6.68 million barrels to 325.4 million barrels last week, the Energy Department said Jan. 7 in a weekly report. Supplies at Cushing, Oklahoma, where oil that’s traded on Nymex is stored, climbed 14 percent to 32.2 million barrels, the highest since at least April 2004, when the department began keeping track of supplies there.
The price of oil for delivery next December is 42 percent more than for the current month, increasing the opportunity for traders to profit from storing crude for later use. This structure, in which the subsequent month’s price is higher than the one before it, is known as contango.
Supplies of gasoline and distillate fuel, a category that includes heating oil and diesel, have climbed the past five weeks, according to the Energy Department.
Gasoline futures for February delivery rose 2.23 cents, or 2.1 percent, to $1.1105 a gallon in New York. Heating oil for February fell 3.16 cents, or 2.1 percent, to $1.488 a gallon.