Feb. 5 (Bloomberg) -- Crude oil was little changed after falling on a government report that showed U.S. inventories of the fuel jumped more than twice the amount analysts forecast. Supplies rose 7.2 million barrels to 346.1 million barrels last week, the highest since July 2007, according to the Energy Department yesterday. Inventories were forecast to climb 3 million barrels, the median of 14 analyst estimates in a Bloomberg News survey. Prices rose earlier on signs OPEC is implementing a record production cut announced in December.“We’ve got a tremendous surplus in oil supplies and it will only go higher,” said Sean Brodrick, natural resource analyst with Weiss Research in Jupiter, Florida. “Demand is falling faster than OPEC and other producers can cut back.”
Crude oil for March delivery fell 14 cents, or 0.4 percent, to $40.18 a barrel at 11:28 a.m. Sydney time on the New York Mercantile Exchange. Futures declined 46 cents, or 1.1 percent, to settle at $40.32 a barrel in New York yesterday. Prices are down 9.9 percent this year and 55 percent from a year ago.
The increase last week left stockpiles 15 percent higher than the five-year average for the period, the department said.
The price of oil for delivery in April is $3.92 a barrel higher than for March. December futures are up $13.29 from the front month. This structure, in which the future monthÂ’s price is higher than the one before it, is known as contango, and is often an indicator of oversupply.
“The contango is fascinating,” said Christopher Edmonds, the managing principal of FIG Partners Energy Research & Capital Group in Atlanta. “It shows that a lot of investors are banking on the fact that the economy is getting better in the second half of the year. I don’t know how realistic that is.”