Oil consumption will drop by 1 million barrels a day this year as the U.S., Europe and Japan face their first simultaneous recessions since the Second World War, Deutsche Bank AG said last week. OPEC members signaled last week they will curb sales to refiners in February.
Crude oil for February delivery fell $3.18, or 7.8 percent, to $37.65 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $37.48, the lowest since Dec. 31. Oil is down 59 percent from a year ago.
Goldman Sachs Group Inc. said that weak underlying economic fundamentals” will dominate the oil market. The bank maintained its forecast that oil will fall to $30 a barrel this quarter, in a report dated Jan. 9.
Oil inventories in Organization for Economic Cooperation and Development nations will likely rise to a 10-year high in the next two months, Goldman analysts Giovanni Serio and Jeffrey Currie said in the note.
OPEC, supplier of more than 40 percent of the world’s oil, agreed last month to slash production quotas by 9 percent to revive prices as the global recession erodes demand. Oil has plunged more than $100 in the past six months.
Saudi Arabian Oil Co., the world’s biggest state oil company, sent notices to refiners in Asia on Jan. 9 that it would lower crude supplies to the region by about 10 percent in February. This was the third straight month that the company reduced sales.
OPEC may trim production further should crude prices continue to decline, Iran’s OPEC governor, Mohammad Ali Khatabi, said yesterday. OPEC is scheduled to meet next in Vienna on March 15. Iran is the group’s second-largest producer, after Saudi Arabia.
Brent crude oil for February settlement declined $1.36, or 3.1 percent, to $43.06 a barrel on London’s ICE Futures Europe exchange.
U.S. crude-oil supplies rose 6.68 million barrels to 325.4 million barrels in the week ended Jan. 2, the highest since May, the Energy Department reported on Jan. 7. It was the 13th gain in 15 weeks.
Inventories at Cushing, Oklahoma, the delivery point for crude oil traded at Nymex, climbed to 32.2 million barrels, the highest since the Energy Department started tracking the supplies in 2004.
Oil for March delivery in New York is at a more than $6 a barrel premium to the front-month contract, while the December 2009 future is more than $19 above February-delivered supplies. The situation where near-term crude oil is cheaper than later- dated oil is called contango.
Gasoline futures for February delivery dropped 2.22 cents, or 2 percent, to $1.089 a gallon in New York. Heating oil for February fell 1.57 cents, or 1.1 percent, to $1.472 a gallon.
Regular gasoline at the pump, averaged nationwide, declined 0.2 cent to $1.79 a gallon, AAA, the largest U.S. motorist organization, said on its Web site today. Prices have dropped 56 percent from the record $4.114 a gallon reached on July 17.
Oil prices also fell on speculation that OAO Gazprom, Russia’s natural-gas exporter, will resume fuel shipments to Europe. The European Union said Russia and Ukraine signed a natural-gas monitoring deal that may pave the way for the resumption of flows by tomorrow morning.”