May 27 (Bloomberg) — Crude oil prices may rise for a second week as refiners increase processing to boost gasoline stockpiles for the peak-demand summer season, which begins this weekend in the U.S., a Bloomberg survey showed.
Thirty-two of 56 analysts and strategists polled by Bloomberg, or 57 percent, said oil prices will rise next week, the most bullish response since March 18. Sixteen, or 29 percent, said they will fall, and eight forecast little change.
U.S. crude oil supplies fell 1.6 million barrels last week from a six-year high, the Energy Department reported. Refiners boosted operating rates during the past four weeks as they increased gasoline output to the highest this year. At yesterday’s close, New York oil futures had fallen 12 percent from a record $58.28 a barrel on April 4.
“We hit the lows of the quarter last week and are on the way higher,” said Abe Glass, president of Glass Futures Corp. in Scarsdale, New York. “The fundamentals may finally have shifted and we may be on the verge of a breakout to the upside.”
Crude oil for July delivery rose $2.36, or 4.9 percent, to $51.01 a barrel in the first four days of trading this week on the New York Mercantile Exchange. In last week’s survey, 59 percent predicted a decline and 22 percent forecast an increase. Sixteen of the last 25 surveys have correctly predicted the market’s direction.
Prices rose 2.6 percent on May 25 after the Energy Department reported the inventory decline in its weekly report. Today, oil was unchanged at 11:34 a.m. Singapore time at $51.01 a barrel, 29 percent higher than a year ago.
Gasoline Demand
U.S. demand for gasoline usually surges between the three- day Memorial Day weekend, which starts tomorrow, and Labor Day in early September as motorists take to the highways for vacations. Gasoline demand rose 1.9 percent to an average 9.4 million barrels a day last week, the department’s figures show.
About 31.1 million Americans will travel at least 50 miles by car during the long weekend, up 2.2 percent from last year, according to AAA, the largest U.S. travel organization. Record gasoline prices are doing little to curb motorist demand, the travel group said.
“Crude oil should get a kick in the rear by gasoline now that the driving season has begun,” Glass said.
Because of the holiday, the New York exchange will close at 1 p.m. local time instead of the normal 2:30 p.m. today and remain closed on May 30.
Insufficient Decline
Some analysts said that one week of inventory declines was insufficient to stop prices from moving lower once trading begins next week. Supplies last week were 11 percent higher than a year earlier.
“I feel that crude oil stocks are there to be refined into products and therefore see the DOE report as neutral, and potentially even bearish longer term,” said Peter Beutel, president of Cameron Hanover Inc., a New Canaan, Connecticut- based energy consultant.
Crude oil inventories were 24 million barrels, or 7.8 percent, above the five-year average last week, the department said. Stockpiles have risen in 13 of the last 15 weeks. Supplies of gasoline and distillate fuel, a category that includes heating oil and diesel, increased, the report showed.
“The trend of increasing crude-oil inventories should resume, resulting in lower crude oil prices,” said John Kilduff, vice president of risk management at Fimat USA in New York. “Having turned the corner into the driving season, gasoline inventories are ample, removing yet another underpinning of the recent bull market in energy prices.”
Short Positions
Short positions held by hedge funds and other speculators, or bets that oil prices will fall, exceeded longs on the Nymex in the week ended May 17 for the first time since mid-December, according to the Commodity Futures Trading Commission. Shorts outnumbered longs by 2,308 contracts, according to the report released on May 20.
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
32 16 8
To contact the reporter on this story:
Mark Shenk in New York at mshenk1@bloomberg.net