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Crude oil falls on speculation inventory gain Original Source Link: (May no longer be active)
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Crude Oil Falls on Speculation U.S. Will Report Inventory Gain
Nov. 10 (Bloomberg) -- Crude oil fell for a third day, to a seven-week low, on speculation the U.S. government will report an increase in the nation's inventories, easing concern about a shortage of winter heating fuel.
Oil stockpiles probably rose 2 million barrels last week, according to the median forecast of 15 analysts surveyed by Bloomberg News. U.S. Gulf of Mexico producers have restored 270,000 barrels a day of production in the past five weeks after disruption caused by Hurricane Ivan in September.
Oil prices fell as ``growing signs of ample supply eased concerns over fuel stocks for the northern winter,'' N.M. Rothschild & Sons Ltd. said in an e-mailed report.
Crude for December delivery fell as much as 24 cents, or 0.5 percent, to $47.13 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the lowest since Sept. 22. It traded at $47.22 at 12:18 p.m. Sydney time.
Yesterday, the contract fell $1.72, or 3.5 percent, to $47.37, the lowest closing price since Sept. 21. Prices have declined 15 percent since they reached a record $55.67 on Oct. 25 on concern about Gulf of Mexico supplies. The price of crude is still 53 percent higher than a year ago.
Prices surged last month after Hurricane Ivan slashed output in the Gulf of Mexico, home to a quarter of U.S. production, which is mostly sweet, or low-sulfur crude. Hurricane damage and subsequent bad weather also delayed increased exports from countries such as Saudi Arabia, which have boosted output to help lower prices. Sweet crude oil is favored by some refiners because it's easier to process into gasoline.
``A month ago people were looking at the supply problem for light, sweet crude oil, but now people are not talking about it,'' said Tetsu Emori, a commodities strategist at Mitsui Bussan Futures Ltd. in Tokyo.
Imports
Imports plunged to an 18-month low of 8.43 million barrels a day in the week ended Sept. 17, as Ivan shut ports along the Gulf Coast. The Louisiana Offshore Oil Port, the biggest U.S. oil import terminal, was closed during three periods in September and October because of rough seas. It operated at a reduced rate in October because of repairs.
``We're back to operating in a pretty standard way and I don't see any big backlog remaining from the storm,'' Mark Bugg, scheduling manager at New Orleans-based Loop LLC, the port operator, said yesterday.
``We're getting 10 million barrels a day of imports with regularity, so inventories should do nothing but increase,'' said John Kilduff, senior vice president of energy risk management at Fimat USA Inc. in New York.
The Energy Department is scheduled to release its weekly report on petroleum inventories at 10:30 a.m. Washington time.
Gasoline, Distillates
Gasoline supplies probably rose by 800,000 barrels last week from 201.7 million the week before, according to the median of forecasts in a Bloomberg News survey. Supplies of distillate fuels, which include heating oil and diesel, probably rose 400,000 barrels from 115.7 million barrels. It would be the first increase in distillate stocks in eight weeks.
``I think we'll see a build in distillates,'' Stanley said. ``The Midwest harvest season is over, so we've probably already seen the peak of the demand for diesel. And we really haven't had the weather for any big demand for heating oil.''
The National Weather Service forecast higher-than-normal temperatures in a six-to-10 day period in much of the Northeast, the region responsible for about 80 percent of U.S. residential consumption of heating oil.
Heating oil for December delivery fell 2.44 cents, or 1.8 percent, to close at $1.342 a gallon in New York, the lowest since Sept. 21. It was at $1.3410 in after-hours trading.
``If inventories fall or the weather chills quickly, product demand may cause a resurgence in crude prices,'' said Jason Schenker, an economist at Wachovia Corp. in Charlotte.
Gulf of Mexico
Oil platforms in the Gulf of Mexico are boosting output as damage from Hurricane Ivan is repaired. Production was down 212,248 barrels as of 12:30 p.m. New York time yesterday, compared with 1.4 million barrels a day on Sept. 15, according to a report by the Minerals Management Service.
Losses in oil production totaled 28.7 million barrels since Sept. 11, when Ivan began to threaten offshore production and pipelines, the report showed.
In a bid to cool rising prices, which would hurt economic growth and fuel demand, the Organization of Petroleum Exporting Countries raised crude oil production in October by 0.5 percent to 30.61 million barrels a day, according to a survey of oil companies, producers and analysts.
It was the most oil OPEC has pumped since November 1979, Energy Department figures show.
Last Updated: November 9, 2004 20:40 EST
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