WTI Crude Falls in Survey on Reduced Demand From U.S. Refineries

Feb 06, 2014 9:07 pm ET

Feb. 7 (Bloomberg) -- West Texas Intermediate crude will probably decline next week as U.S. refineries perform maintenance, reducing demand for the raw material and bolstering supplies, according to a Bloomberg survey.

Nineteen of 37 analysts, or 51 percent, forecast crude will decrease through Feb. 14. Ten respondents, or 27 percent, projected prices will gain, and eight said there will be little change. Last week, 55 percent of analysts projected a drop.

Refineries operated at 86.1 percent of capacity in the seven days ended Jan. 31, down 2.1 percentage points from the prior week, a U.S. Energy Information Administration report on Feb. 4 showed. It was the lowest operating rate since the week ended Oct. 18. Units are often idled at the start of the year after the heating season in November and December.

“We are going into maintenance season,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “At some point, we’re going to see the drop in refinery demand result in big crude supply builds.”

Crude supplies rose 440,000 barrels to 358.1 million, according to the EIA, the Energy Department’s statistical arm. Inventories have climbed during the first quarter during the last 17 years.

Fuel demand fell 4.7 percent to 19.1 million barrels a day last week, according to the EIA. Consumption of distillate fuel, a category that includes heating oil and diesel, slipped 13 percent to 3.94 million barrels a day during the period.

Front-month crude futures rose 35 cents, or 0.4 percent, to $97.84 a barrel during the first four days of the week on the New York Mercantile Exchange. Futures touched $98.83 yesterday, the highest intraday price since Jan. 2.

The oil survey has correctly predicted the direction of futures 50 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
                     10          8        19

--With assistance from Grant Smith in London, Ann Koh, Yee Kai Pin and Winnie Zhu in Singapore and Ben Sharples in Melbourne. Editors: Richard Stubbe, Charlotte Porter