Crude oil traded little changed near $39 a barrel in New York after falling yesterday as a collapse in U.S. house prices raised concern that the global recession will deepen, limiting demand for fuels. Idemitsu Kosan Co., Japan’s second-biggest refiner, will cut crude processing next quarter because of weak demand in the third-largest oil-consuming nation. Oil has fallen 59 percent this year, poised for the first annual decline in seven years, as stockpiles increased and OPEC failed to cut production enough to counter declining consumption. “As long as there is no sign of an economic recovery, people don’t want to put money into the oil market,” Tetsu Emori, a commodity fund manager at Astmax Ltd. in Tokyo, said by telephone. “Demand is slower than we expected and all the factors are looking bearish.” Oil for February delivery was at $39.12 a barrel, up 14 cents, on the New York Mercantile Exchange at 12:36 p.m. Singapore time. Earlier, prices rose as much as 1.8 percent to $39.69 a barrel. Crude has fallen 28 percent this month. Yesterday, futures dropped 93 cents, or 2.3 percent, to close at $38.98 a barrel. The median resale price of homes in the U.S. fell 13 percent, probably the largest drop since the Great Depression, National Association of Realtors Chief Economist Lawrence Yun said in Washington. Confidence among Japanese manufacturers fell the most on record as the world’s second-largest economy slid deeper into a recession, according to survey released by the Cabinet Office and Finance Ministry today. Contango Market Oil for delivery in February 2010 was more than $14 higher than the current month yesterday, a market condition known as contango. The pattern encourages companies to store oil. “The contango means the inventories are increasing,” said Astmax’s Emori, who manages Japan’s biggest commodity fund. “More-than-adequate levels of inventories will push prices down. It’s a very, very bearish sign.” U.S. crude-oil stockpiles probably increased 500,000 barrels in the week ended Dec. 19 from 321.3 million the week before, according to the median of responses in a Bloomberg News survey before an Energy Department report today. It would be the 12th gain in 13 weeks, also an indication that demand is falling. Volume in electronic trading on the exchange was 232,352 contracts as of 3:13 p.m. in New York yesterday. Volume totaled 287,570 contracts Dec. 22, down 42 percent from the average over the past three months. Open interest on Dec. 22 was 1.14 million contracts. The exchange has a one-day delay in reporting open interest and full volume data. Thin Volumes “Until the end of this week, trading volumes should be smaller,” said Astmax’s Emori. “The prices could be quite choppy.” A cyclone off the northwest coast of Australia has shut production at some oil and gas wells there. Nexus Energy Ltd. and Woodside Petroleum Ltd. both said that rigs they operated are closed because of tropical storm Billy, with winds of up to 60 knots and sea swells of up to four meters. The Organization of Petroleum Exporting Countries announced a record production cut last week in response to collapsing demand as a result of the economic slowdown. The group may hold an emergency meeting before its next scheduled gathering in March, Venezuelan Energy Minister Rafael Ramirez said yesterday. Ramirez, who was attending a summit of gas-producing nations in Moscow, didn’t say where or when an emergency oil meeting might take place. OPEC President Chakib Khelil said four days ago that OPEC may meet in Kuwait City on Jan. 19 to discuss further production cuts, adding that OPEC will continue to reduce supply as demand falls until an “equilibrium” is reached. Brent crude oil for February settlement was at $40.28 a barrel, down 8 cents, on London’s ICE Futures Europe exchange at 12:38 p.m. Singapore time. Yesterday, the contract declined $1.09, or 2.6 percent, to $40.36 a barrel. To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.

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