WTI Crude Declines in Survey as U.S. Oil Production Gains

Jan 17, 2014 3:51 pm ET

(Updates prices in ninth paragraph.)

Jan. 17 (Bloomberg) -- West Texas Intermediate crude will probably decline next week as U.S. production climbs while fuel demand slips, according to a Bloomberg survey.

Fourteen of 34 analysts, or 41 percent, forecast crude will decrease through Jan. 24. Thirteen respondents, or 38 percent, projected prices will gain, and seven said there will be little change. Last week, 46 percent of analysts projected an increase.

U.S. crude production increased 14,000 barrels a day to 8.16 million in the week ended Jan. 10, the most since 1988, the Energy Information Administration reported on Jan. 15. Output has surged as the combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies trapped in shale formations. The EIA said total fuel demand averaged over the last four weeks was down 2.7 percent.

“I am looking for crude oil to trade lower next week as the potential for increased production and steady global demand continues to pressure the market,” Tom Power, senior commodities broker at RJO Futures in Chicago, said yesterday. “The U.S. shale oil boom is happening faster than most anticipated and will be a game changer throughout 2014.”

Crude supplies have climbed in January for nine of the past 10 years, according to the EIA, the Energy Department’s statistical arm. Stockpiles fell 7.66 million barrels to 350.2 million last week, the least since March 2012.

Total petroleum consumption in the four weeks ended Jan. 10 slipped 535,000 barrels a day to 19.1 million, the least since October.

‘Finally Rise’

“Crude oil inventories should finally rise next week, allowing prices to come under pressure,” said John Kilduff, partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. There may be “further increases in overall inventories of refined products, due to slackening demand.”

Gasoline stockpiles gained 6.18 million barrels to 233.1 million last week, the highest level since February, according to the EIA.

Front-month crude futures rose $1.65, or 1.8 percent, to $94.37 a barrel this week on the New York Mercantile Exchange. Prices are down 4.1 percent this year.

The oil survey has correctly predicted the direction of futures 51 percent of the time since its start in April 2004.

     Bloomberg’s survey of oil analysts and traders, conducted
each Thursday, asks for an assessment of whether crude oil
futures are likely to rise, fall or remain neutral in the coming
week. The results were:

                    RISE      NEUTRAL    FALL
                     13          7        14

--With assistance from Grant Smith in London, Yee Kai Pin, Winnie Zhu and Ann Koh in Singapore, Ben Sharples in Melbourne and Sarah Chen in Beijing. Editors: Margot Habiby, Richard Stubbe