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Crude oil may trade near $ 60 a barrel in New York next week, stalling after a 3.7 percent rally in the past two days, on signs stockpiles will be enough to compensate for a possible production cut by OPEC.

Crude oil may trade near $ 60 a
barrel in New York next week, stalling after a 3.7 percent rally
in the past two days, on signs stockpiles will be enough to
compensate for a possible production cut by OPEC.

Sixteen of 37 analysts surveyed, or 43 percent, said prices
will be little changed. Eleven forecast that prices would fall
and 10 expected an increase. Last week, 53 percent said prices
would be little changed. The benchmark contract traded at $60.18
a barrel at 9:55 a.m. Singapore time.

“There are no bullish signs for the short term in the
crude oil markets,” said Antonio Szabo, chief executive of
Houston-based consultant Stone Bond Technologies. “Crude
markets are well supplied and hedge-fund interest seems neutral
at best.”

The Organization of Petroleum Exporting Countries is
scheduled to discuss production targets at a Jan. 31 meeting.
The group, which produces about 40 percent of the world’s oil,
increased availability this year to meet higher fuel demand and
make up for shut U.S. fields. U.S. oil supplies in the week
ended Dec. 23 were 12 percent above the five-year average for
the date, the Energy Department said.

Crude rose $ 1.89, or 3.2 percent, to $ 60.32 a barrel during
the three full days of trading this week on the New York
Mercantile Exchange. The exchange will shut today at 1 p.m. in
New York instead of the normal 2:30 p.m. and remain closed on
Jan. 2 because of the New Year’s holiday.

Prices are 15 percent below a record $ 70.85 a barrel
reached on Aug. 30, the day after Hurricane Katrina struck the
U.S. Gulf of Mexico coast. The storm shut production platforms,
refineries, pipelines and oil ports in the region.

Iranian Comment

Prices surged on Dec. 28 after Hadi Nejad-Hosseinian,
Iran’s deputy oil minister, said OPEC should reduce production
after peak winter demand “to ensure stability in prices.” Iran
is OPEC’s biggest oil producer after Saudi Arabia.

OPEC agreed at a meeting earlier this month to keep its
output quotas unchanged at 28 million barrels a day. OPEC will
have to pump 28.5 million barrels a day in 2006 to meet demand,
the International Energy Agency said on Dec. 13.

“The market recognizes a strong price rise will be
counteracted with OPEC deferring the cutting of supply at its
meeting at the end of January,” said Stephen Bartrop, a
resources analyst at financial advisory firm Fat Prophets in
Sydney. “Hence we expect oil to trade in a $ 58-$ 64 range in
January.”

Economic growth in the U.S. and China, which together
consume about 34 percent of the world’s oil, has pushed demand
and prices higher this year. The U.S. economy will expand 3.3
percent next year and China’s will surge 8.2 percent, according
to the International Monetary Fund.

U.S. Inventories

U.S. inventories of crude oil rose 118,000 barrels to 322.6
million last week, according to a weekly report from the Energy
Department. Gasoline supplies fell 1.2 million barrels to 202.9
million. Stockpiles of distillate fuel, a category that includes
heating oil and diesel, fell 890,000 barrels over the period.

Gasoline supplies were 4.5 million barrels, or 2.2 percent,
below the five-year average for the date, the department said.

“A tighter balance in the gasoline market is a bullish
factor even in the off-season,” said Makoto Takeda, an energy
analyst at Iriya Bansei Securities Co. in Tokyo. “On the other
hand, distillates supply is still in surplus over last year.
Given the forecasts for milder weather in U.S. Northeast, supply
disruption is not expected, at least in the near term.”

Some traders expect warm weather in U.S. to send prices
lower. Higher-than-normal temperatures will cover most of the
U.S. from Jan. 4 through Jan. 12, according to the National
Weather Service.

Home-heating demand in the Northeast, where 80 percent of
the nation’s heating oil is used, will be 20 percent below
normal through Jan. 5, according to Weather Derivatives, a
forecaster in Belton, Missouri.

     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 FALL NEUTRAL
10 11 16

Source : www.bloomberg.com

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