Oil Energy Thread (oih)

[madrose1]

Oil 57.30 pulls back from four week high of $59 on seasonal demand , growing economy and severe cold thru mid Feb

By Christian Schmollinger

Feb. 2 (Bloomberg) -- Crude oil was little changed in New York after falling from a four-week high yesterday on signs late- winter heating demand may have limited impact on U.S. fuel supplies.

Oil plunged late yesterday, having risen almost $5 a barrel in three days on signs cold weather and economic growth may increase demand. Crude inventories are 1.2 percent above last year's level and distillate supplies, including heating oil and diesel fuel, are 2.7 percent greater with gasoline levels 2.5 percent higher.

`` The heating season is sort of slowly being taken out of the picture for investors,' said Dariusz Kowalczyk, chief investment strategist for CFC Seymour Ltd. in Hong Kong. ``The supply situation is ok. I don't see that part of the equation having an impact on prices in the near future.'

Crude oil for March delivery was at $57.36 a barrel, up 6 cents, in after-hours electronic trading on the New York Mercantile Exchange at 12:01 p.m. in Singapore.

The contract fell 84 cents, or 1.4 percent, to $57.30 yesterday, having gained 7.6 percent the two previous sessions on reports showing increased fuel demand and economic growth in the U.S., the world's biggest oil consumer.

Crude oil may rise next week on speculation U.S. fuel consumption will increase because of cold weather and a growing economy.

Twenty-five of 47 analysts, traders and brokers, or 53 percent, said prices will increase, according to a Bloomberg News survey. Fourteen expected a decline and eight forecast little change. Last week, 56 percent of respondents expected futures to rise.

In London, Brent crude oil for March settlement was at $56.85, up 13 cents, in electronic trading on the ICE Futures exchange at 11:58 a.m. Singapore time.

Seasonal Demand

Heating demand in the U.S. Northeast will be 28 percent above normal through Feb. 8, forecaster Weather Derivatives said. Temperatures may remain below normal through Feb. 15, the National Weather Service said yesterday. The region accounts for about 80 percent of the nation's heating oil use.

The cold weather ``will continue to be a factor underpinning the price of crude,' said CFC Seymour's Kowalczyk. ``The one unknown is how long the U.S. will have temperatures below historical averages.'

January was the peak month for U.S. deliveries of distillates, including heating oil and diesel, in three of the past five years, according to Energy Department data.

U.S. distillate stockpiles fell for the first week in seven, leaving inventories at 140 million barrels on Jan. 26, 9.1 percent above the five-year average for the period last week. Oil stockpiles held 324.9 million barrels, 10 percent above average, the department said.

Direction

As prices near the $60 a barrel level, oil should fall as supply is growing faster than demand this year, said Kowalczyk. Crude at $50 finds support because the Organization of Petroleum Exporting Countries will work to keep it higher and developing some new fields becomes uneconomical at that level.

``If we're close to $60, I'd say sell and if we're close to $50 I'd say buy,' said Kowalczyk.

Oil may rise today following a stronger than expected report on the U.S. unemployment figures that will support an outlook for better global economic growth. Oil rose 2.1 percent on Jan. 31 following an announcement that the U.S. economy grew 3.5 percent in the fourth quarter of 2006.

OPEC, which produces 40 percent of global oil, began a 500,000 barrel a day production cut yesterday. The reduction raises the total amount of oil taken out of the market to 1.7 million barrels since Nov. 1.

The group's output was 385,000 barrels a day higher than its targets in December. Venezuela and Nigeria produced a combined 220,000 barrels over the mark.

To contact the reporter on this story: Christian Schmollinger in Singapore at [e-mail]