The ongoing tension between bad economic news and OPEC production cuts resulted in a virtual stalemate last week. Oil started the week just above $40 a barrel and finished where it started with very little movement in between. Even a jump of 7.2 million barrels in the US crude inventory did little to move prices. Threats by various OPEC oil ministers to cut production further at the mid-March meeting continued last week as prices stubbornly refuse to move higher despite a series of cuts beginning last fall. Last week OPEC reported that it received an average of $41 per barrel of oil.
The $15 price differential between oil for March ($40) and December ($55) delivery is leading oil companies to continue storing large quantities of unsold oil aboard tankers. This in turn is contributing to downward pressure on prices. Oil prices fell 6.5 percent during January, the seventh consecutive monthly decline.
Despite the economic difficulties, US oil consumption in January was just down 2.8 percent over last year and gasoline was down by only 0.5 percent.