By Sandy Shore
AP Energy Writer
DENVER (AP) — Crude futures for March and beyond sank Tuesday revealing broad pessimism in the markets over energy demand for the foreseeable future.
A limited number of traders took advantage of the February contract which expires Tuesday, the only month that saw prices rise. Crude prices have fallen as the places to store it have thinned, with millions of barrels of unwanted oil now being stored at sea or in facilities on land.
Light, sweet crude for February delivery rose $2.23 to settle at $38.74 per barrel on the New York Mercantile Exchange. Trading in the final day of the contract was very light, leading to price swings close to $7.
The March contract, where the vast majority of trading took place, fell $1.53 to settle at $40.68.
The phenomenon is what traders call a ‘‘contango,’’ where oil that must delivered in the next few weeks is cheaper than the contracts in the months ahead.
‘‘This is probably the strongest contango we’ve ever had,’’ said Michael Lynch, president of Strategic Energy & Economic Research.
The February contract has fallen about one-third in two weeks because of burgeoning supplies at Cushing, Okla., the delivery point for the Nymex.
That has yet to payoff for motorists, with the cost of retail gasoline continuing to rise. Gas prices have risen for weeks after bottoming out on Dec. 31 at about $1.61 a gallon.
In what may be a maddening turn for consumers, gas costs about 17 cents more per gallon than it did a month ago, though a barrel of oil costs $3.60 less.
Gas prices nudged up again overnight, with crude falling so fast that refined products like gasoline have yet to catch up. Refiners are also taking production off line with Americans driving billions fewer miles than they did last year.
Production cuts by the Organization of Petroleum Exporting Countries have yet to create equilibrium in an oil market gripped by recession. Crude prices have been in a tailspin since July.
With storage tight on land, there are an estimated 80 million barrels of oil being held in large tankers offshore, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.
‘‘We’re filling up every crevice of storage that anybody can find,’’ he said. ‘‘The pipelines are filled up, the terminals are filled up. Refiners are amply supplied. This is a market that definitely has a surplus.’’
If crude at sea has reached 80 million barrels, it could nearly supply the entire globe for a day.
Weighing on all the contracts is a severe recession in developed countries and a slump in global oil demand. Hundreds of U.S. companies report fourth quarter earnings this week and could cement fears that the global economy is worsening.
Schlumberger Ltd., the U.S. oil services giant, leads off the energy sector when it reports earnings Friday. It has already warned of job cuts.
Traders fully expect that the March contract will follow the downward arch of the contract that expires today if there is no morale-boosting economic news soon.
‘‘We need to see enough improvement in demand to absorb some of these excess supplies,’’ Ritterbusch said.
Trader and analyst Stephen Schork said the current gloomy economic indicators in the United States — such as the rising jobless rate and falling industrial production — did not point to a quick recovery.
‘‘Bottom line, we have high supply and low demand. Why should the March Nymex crude oil not trade below $40 ... or 30?’’ Schork wrote in his daily market comment.
Alaron Trading analyst Phil Flynn places more importance on the futures contract for April and the months ahead, noting that many refineries schedule maintenance during the February-March timeframe.
April contracts, he said, are the start of the key summer driving season.
‘‘There’s still a debate as to whether or not demand is going to perk up a little bit or how quickly the economy is going to come back. But right now, if you want oil, there’s plenty of it out there to get.’’
Retail gasoline prices rose .001 cent to $1.843 a gallon, according to auto club AAA, the Oil Price Information Service and Wright Express. That’s up 17.5 cents from the previous month but still $1.167 below pump prices a year ago.
In London, the March Brent contract fell $1.18 to settle at $43.62 on the ICE Futures exchange.
In other Nymex trading, gasoline futures fell 2.4 cents to settle at $1.1431 a gallon. Heating oil dropped 9.76 cents to settle at $1.3758 a gallon while natural gas for February delivery slid nearly 16 cents to settle at $4.642 per 1,000 cubic feet.
Associated Press writers Alex Kennedy in Singapore and Pablo Gorondi in Budapest, Hungary, contributed to this report.
By Sandy Shore
- AP Story Section
Inside bin Laden’s lair with SEAL Team Six
WASHINGTON (AP) — So much could have gone wrong as SEAL Team Six swept over Pakistan’s dark landscape, dropped down ropes into a compound lined by wall after wall, exchanged gunfire and confronted “Geronimo” face to face. The vital things went right.
Just about every contingency the 25 commandos trained for came at them, rapidly, chaotically and dangerously, in their lunge for Osama bin Laden.
- WWII pilot gets Distinguished Service Cross BOSSIER CITY, La. (AP) — A Texas man nearing his 90th birthday has been awarded the Distinguished Service Cross for his part in a daring 1943 attack on Nazi-controlled oil fields in Romania.
- Ohio dad who shock-collared kids gets 16 years XENIA, Ohio (AP) — An Ohio man has been sentenced to 16 years in prison for disciplining his children with a dog shock collar.
- Cop suspected in wife’s vanishing loses new love BOLINGBROOK, Ill. (AP) — A woman who became engaged to a former suburban Chicago police sergeant suspected in his wife’s 2007 disappearance moved out of his home Friday, hours after he spoke about his current and past relationships on a national television show.
- Pythons found after brief escape from Calif. home SAN LUIS OBISPO, Calif. (AP) — A 23-foot, 130-pound python can run but it can’t hide.
- Bush first visit to future Dallas home DALLAS (AP) — Former President George W. Bush has made his first visit to the $2.1 million Dallas house that he’ll soon call home.
- Doctor says octuplets appear healthy BELLFLOWER, Calif. (AP) — Newborn octuplets in Southern California are a feisty bunch that appear healthy even at nine weeks premature, a doctor said Tuesday.
Austin program works to restore wildlife habitat
AUSTIN (AP) — Patricia Roberts-Miller says her yard was a boring swath of grass when she and her family moved into their North Austin home three years ago.
- TI to shed 3,400 jobs by September Texas Instruments Inc., which makes chips for cell phones and other gadgets, said Monday it will cut 3,400 jobs because demand has slackened amid a slowing economy.
- Elder Bush: Son held to principles after attacks NEW ORLEANS (AP) — Former President George H.W. Bush says he’s proud of how his son held to his principles during his presidency and kept the U.S. safe after the 2001 terror attacks.
- More AP Story Section Headlines
- Inside bin Laden’s lair with SEAL Team Six