Oil may decline next week on concern that the reversal of the Seaway Pipeline will not be enough to alleviate a record supply glut in the central U.S., a Bloomberg survey showed.
Nineteen of 34 analysts, or 56 percent, forecast oil will drop through May 25. Nine respondents, or 26 percent, predicted prices will rise and six estimated they will be little changed. Last week, 48 percent of surveyed analysts expected a decrease.
Enbridge Inc. (ENB) and Enterprise Products Partners LP (EPD:US) completed the pipeline reversal yesterday and plan to start shipping oil this weekend from Cushing, Oklahoma, the delivery point for West Texas Intermediate oil futures traded in New York, to the Gulf Coast. U.S. oil inventories rose to a 22-year high and Cushing stockpiles peaked in the week ended May 11 as domestic output increased, according to the Energy Department.
“The Seaway reversal has disappointed as a positive catalyst for WTI,” said Thomas Rinaldi, a New York-based analyst at Guggenheim Securities LLC. “The production growth has just overwhelmed the de-bottlenecking efforts.”
The 500-mile (880-kilometer), 30-inch (76-centimeter) line is being commissioned and will initially be able to deliver 150,000 barrels per day, increasing to more than 400,000 in the first quarter of 2013, the companies said in a statement yesterday.
Crude stockpiles climbed 2.13 million barrels to 381.6 million last week, the highest level since 1990. Supplies at Cushing increased 1 million barrels to 45.1 million, the highest level since the department began tracking inventories at the hub in 2004.
Oil may also decline next week on signs of a slower economic recovery in the U.S. Consumer confidence fell last week to the lowest level in almost four months and more people than forecast filed claims for unemployment benefits.
“The general economic sentiment” is weighing on oil prices, said Jacob Correll, a commodity analyst at Summit Energy Inc. in Louisville, Kentucky.
Crude oil for June delivery dropped $4.65, or 4.8 percent, to $91.48 a barrel this week on the New York Mercantile Exchange, the lowest settlement since Oct. 26.
The oil survey has correctly predicted the direction of futures 49 percent of the time since its start in April 2004.
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 NEUTRAL FALL 9 6 19
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