NEW YORK — Oil prices wavered today as the nation’s employment picture darkened and consumers pulled back on spending.
Benchmark crude for June delivery ticked up 15 cents to settle at $51.12 a barrel on the New York Mercantile Exchange. In London, Brent prices rose 2 cents to settle at $50.80 a barrel on the ICE Futures exchange.
Natural gas, used heavily by utilities and major industries, continued to test seven-year lows as consumers spend less on energy and companies cut back on production.
Underground supplies of natural gas rose more than expected last week and, according to the Energy Information Administration, reached 1.82 trillion cubic feet for the week ended April 24.
That is 34 percent above storage levels just a year ago, hinting at just how much the economy has slowed.
“There’s still too much of it out there,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.
“When you’re in a sharp recession like this, you’ve got plants and factories all over cutting shifts to save on their fixed costs, and one of those is electricity costs to keep a plant open 24 hours a day,” he said.
Today, a Commerce Department report said consumer spending fell more than expected, dropping 0.2 percent in March. And incomes were also down by 0.3 percent as waves of layoffs made their way through the economy.
Meanwhile, the Labor Department said a record 6.3 million people drew unemployment benefits last week. However, the number of newly laid-off workers signing up for jobless benefits dropped unexpectedly to a seasonally adjusted 631,000.
Oil companies also had a miserable first quarter as energy prices plunged.
Crude prices soared last year to more than $147 a barrel as experts worried that world demand would soon outstrip production. This year, oil prices have hovered around $50 a barrel as U.S. storage houses continue to fill with a huge surplus. The government reported Wednesday that the nation is consuming less petroleum per day than it has in a decade.
Today, Exxon Mobil Corp. said first-quarter earnings fell 58 percent from a year ago, its lowest quarterly profit in more than five years. Marathon Oil Corp. said its first-quarter profit fell 61 percent from a year ago.
Few expect a quick rebound for oil prices given the current economic outlook.
Christina Romer, the chairwoman of President Obama’s Council of Economic Advisers, predicted another economic contraction in the second quarter. Romer, who was testifying today before Congress’ Joint Economic Committee, also said there would likely be continued increases in unemployment for several more months.
The Organization of the Petroleum Exporting Countries has tried for several months to prop up the price of oil by producing less and draining the global surplus. Joy at the pump for consumers has meant some serious pain for OPEC nations who are now wrestling with their national budgets.
In May, OPEC ministers will consider whether to pull even less crude from the ground.
Tanker tracker Oil Movements said today it’s unlikely OPEC will call for slowing oil operations on top of the 4.2 million barrels they’ve already pledged to cut each day.
Oil Movements said in a research note that in March, OPEC members were only 80 percent compliant with previous production cuts. In April they cut an additional 100,000 to 300,000 barrels a day.
That’s “hardly likely to make up a convincing case for another round of cuts,” Oil Movements said.
If OPEC did call for less crude production, it could be the tipping point that forces oil prices higher, analyst and trader Stephen Schork said.
“We’ve had an ongoing deluge of one bearish report after another, and crude oil prices haven’t dropped any lower,” Schork said. “So if you have anything that comes out that’s perceived bullish, it could send oil back up to $60” a barrel.
That eventually could lead to higher energy prices for everyone, but many industry experts don’t think OPEC nations can stomach another production cut.
Retail gas prices were flat overnight, with the national average rising a tenth of a penny to $2.051 a gallon according to auto club AAA, Wright Express and Oil Price Information Service. Pump prices are up less than a penny from a month ago, but they’re $1.566 cheaper than last year.
In other Nymex trading, gasoline for May delivery rose by 2.58 cents to settle at $1.4742 a gallon while heating oil dropped 1.44 cents to settle at $1.3147 a gallon. Natural gas for June delivery fell 3 cents to settle at $3.373 per 1,000 cubic feet.