Monday, January 19, 2009
Oil May Fall as U.S. Inventories Rise, Survey Shows
Monday, 19 January 2009
Oil may fall next week because inventories at Cushing, Oklahoma, where New York-traded West Texas Intermediate crude is delivered, have gained as traders try to profit from price differentials. Seventeen of 35 analysts surveyed by Bloomberg News, or 49 percent, said futures will decline through Jan. 23. Twelve respondents, or 34 percent, forecast oil will increase and six said there will be little change. Last week, 41 percent of analysts expected a gain in prices.
Cushing supplies climbed 2.5 percent to 33 million barrels last week, the U.S. Energy Department said on Jan. 14, the highest since April 2004, when the department began keeping records for the location. The price of oil for future months is more expensive than for the front month, allowing traders to profit if they can store crude for later delivery.
“The February contract expires next Tuesday and I am expecting continued downward pressure on that contract as crude oil inventories continue to build at Cushing,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. He said March oil may also decline after it becomes the contract closest to expiration.
The February oil contract in New York ended the week with a $6.06 discount to March. February oil expires on Jan. 20.
Crude oil for February delivery declined $4.32, or 11 percent, to $36.51 a barrel this week on the New York Mercantile Exchange. Prices have dropped 75 percent from the record $147.27 a barrel reached on July 11.
The oil survey has correctly predicted the direction of futures 49 percent of the time since its start in April 2004.
Source: Bloomberg
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