Supplies of distillate fuel, a category that includes heating oil and diesel, rose 1.5 million barrels last week, according to the median of responses in a Bloomberg News survey before tomorrow's report. Gasoline stockpiles also increased 1.5 million barrels. Analysts discounted moves by members of the Organization of Petroleum Exporting Countries to cut supply.
``We still have high inventory levels in the U.S., which is weighing on prices,'' said Tom Bentz, an oil broker with BNP Paribas Commodity Futures Inc. in New York. ``The market quickly discounted the token OPEC cuts. The moves by Venezuela and Nigeria are not enough to tighten supply.''
Crude oil for November delivery fell $1.79, or 2.9 percent, to $59.24 a barrel at 11:02 a.m. on the New York Mercantile Exchange. Oil touched $59.15, the lowest since Feb. 17. Prices are down 9.4 percent from a year ago. Futures have declined 24 percent from a record $78.40 a barrel on July 14 as tensions in the Middle East eased and U.S. fuel stockpiles increased.
Crude oil, gasoline, heating oil, diesel and natural gas supplies in the week ended Sept. 22 were above the five-year average for the period, the Energy Department said.
Higher Prices Ahead
Oil analysts are raising their price estimates for next year in anticipation of increased demand that may outpace the development of new fields. Crude oil will average $64 a barrel in New York in 2007, according to the median forecast of 29 analysts surveyed by Bloomberg News last week. That's $2 higher than estimated at the end of the second quarter.
``The recent fall in prices is due to short-term factors,'' said Kevin Norrish, a director of commodities research for Barclays Capital in London. Barclays expects oil next year to average $76.70 a barrel, the highest forecast in the survey. ``We're looking for fairly strong global growth, and we don't see capacity expanding by much.''
Oil's climb from less than $20 a barrel at the end of 2001 has been driven by the failure of producers to generate new supplies fast enough to keep pace with rising demand, especially in China. Analysts are betting that trend will continue.
They forecast that oil would be $58 a barrel in 2006, according to the median of estimates in a Bloomberg survey in December. So far, crude oil has averaged $68.21, which is higher than any prior year.
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