Oil

Dec. 2 (Bloomberg) -- Crude oil may rise as inventoriesdecline and cold weather in the U.S. Northeast raises demand forheating fuel, a Bloomberg survey showed. Twenty-three of 54 analysts surveyed, or 43 percent, saidprices will increase next week. Fourteen, or 26 percent, saidoil will fall and 17, or 31 percent, expect little change.

Temperatures in the Northeast are forecast to fall belownormal next week after a warm November. U.S. crude oil andgasoline supplies declined last week, the Energy Departmentreported on Nov. 30. The report showed that refiners arereducing gasoline output as they bolster heating oil stockpiles. ``The weather will be the key next week,'' said JasonSchenker, an economist at Wachovia Corp. in Charlotte, NorthCarolina. Traders will be watching next week's Energy Departmentreport to gauge the increase in heating fuel demand. ``Ifinventories decline like they did, it will be quite bullish forprices,'' he said.

Crude oil fell 24 cents, or 0.4 percent, during the firstfour days of this week to $58.47 a barrel at yesterday's closeon the New York Mercantile Exchange. Prices have risen 35percent this year. Oil is down 17 percent from a record $70.85 a barrelreached on Aug. 30, the day after Hurricane Katrina damaged oilplatforms and refineries along the U.S. Gulf of Mexico coast.

Heating Demand

Home-heating demand in the Northeast, where 80 percent ofthe nation's heating oil is used, will be 14 percent abovenormal through Dec. 8, Weather Derivatives, a forecaster inBelton, Missouri, said yesterday. ``November was certainly not a cold month,'' said MichaelPalmerino, a forecaster at Lexington, Massachusetts-basedMeteorlogix. ``Temperatures are still on the mild side butindications are that they will be below normal over the nextweek to 10 days.'' The average temperature in Boston last month was 1 degreeFahrenheit above normal, Palmerino said. In New York the averagetemperature in November was 2.5 degrees higher than normal, hesaid. Next week both cities will be colder than normal withthermometers plunging as much as 8 degrees below normal on Dec.7, according to Palmerino. ``Cold weather in the northeastern states may finallyprovide some much-needed direction for the oil market,'' saidGerard Burg, a minerals and energy economist at NationalAustralia Bank in Sydney. ``A draw in both crude oil anddistillates would pressure traders to push oil higher.''

U.S. Inventories

Gasoline supplies dropped 545,000 barrels to 199.9 millionin the week ended Nov. 25, according to the Energy Department'sreport. Stockpiles were 2.3 percent below the five-year averagefor the date, the department said. Crude oil inventories fell4.2 million barrels to 317.6 million, the report showed. Gasoline consumption rose last week as pump prices fell.Gasoline supplied, a proxy for demand, has averaged 9.2 millionbarrels a day in the past four weeks, up 1.3 percent from thesame period last year. ``Given the robust economic growth in the U.S. the gasolinenumber seems a latent bullish figure even in the off season,''said Makoto Takeda, an energy analyst at Iriya Bansei SecuritiesCo. in Tokyo. U.S. gasoline demand peaks during the driving season, whichruns from late May to early September. During this period crudeoil and heating oil futures usually take their cue from gasoline.Global fuel consumption peaks during the Northern Hemispherewinter, when furnaces are stoked. Heating oil futures areusually the focus during this period.

Economic Growth

The U.S. economy grew at a 4.3 percent annual rate fromJuly through September, the quickest since the first quarter oflast year, even as energy prices surged to records. The revisedfigure for gross domestic product, the value of all goods andservices produced in the U.S., compares with a 3.8 percent paceinitially estimated, the Commerce Department reported Nov. 30. U.S. manufacturers are hiring workers and rebuildinginventories as fuel costs drop, bolstering the economy. TheInstitute for Supply Management said yesterday its factory indexwas 58.1 in November, a level the group said is consistent withU.S. economic growth in excess of 5 percent. Rising prices ``coupled with extremely strong economicreadings this week reinvigorated concerns that demand, overall,will increase and pressure the ability of producers to meet thisdemand,'' said John Kilduff, vice-president of risk managementat Fimat USA in New York.

Crude-oil prices have almost tripled in four years onspeculation surging consumption would outpace supply. The U.S.consumes 25 percent of the world's oil. The U.S. economy, theworld's biggest, will grow 3.5 percent next year and 3.3 percentin 2007 after 3.6 percent this year, the Organization forEconomic Cooperation and Development said Nov. 29. The economy in China, the second-biggest oil consumer, isexpected to expand 9.4 percent in 2006 after growing 9.3 percentthis year, the organization said. China consumed 8.3 percent ofthe world's oil last year, according to a report by BP Plc.*T

Bloomberg's survey of oil analysts and traders, conductedeach Thursday, asks for an assessment of whether crude oilfutures are likely to rise, fall or remain neutral in the comingweek. The results were:
RISE FALL NEUTRAL 23 14 17