Crude Oil Is Steady Amid Forecasts of Increased U.S. Supplies

By Mark Shenk

Nov. 19 (Bloomberg) -- Crude oil was little changed in New York amid forecasts that a report will show U.S. oil supplies increased for an eighth week as a recession erodes global demand.

Stockpiles probably climbed 1 million barrels in the week ended Nov. 14, according to the median of 12 analyst estimates before an Energy Department report today. The Organization of Petroleum Exporting Countries, the International Energy Agency and U.S. Energy Department slashed demand projections this month.

``The bottom line is that you don't have anything solid out there to support a sustained rally,'' said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. ``The financial crisis has led to economic weakness and falling demand in the U.S. The problems in the U.S. are now spreading to China and other developing countries.''

Crude oil for December delivery rose 3 cents, or 0.1 percent, to $54.42 a barrel at 10:09 a.m. Sydney time on the New York Mercantile Exchange. Oil has dropped 63 percent since reaching a record $147.27 in July. Futures fell 56 cents, or 1 percent, to $54.39 a barrel yesterday, the lowest settlement since Jan. 29, 2007.

Gasoline for December delivery fell 3.78 cents, or 3.2 percent, yesterday to $1.1368 a gallon in New York, the lowest settlement since the contract was introduced in October 2005.

Prices rose earlier yesterday as a hijacked Saudi Arabian supertanker was anchored close to the Somali coast. Pirates directed the Sirius Star, the largest merchant ship ever seized, to the Eyl coastal area to the north of Somalia, the U.S. Navy said. The vessel is carrying 2 million barrels of crude oil.

``This exemplifies that even the Saudis are vulnerable,'' said Gianna Bern, president of Brookshire Advisory & Research Inc., an energy research consulting company based in Flossmoor, Illinois. ``It's important to remember that piracy and pipeline bombings are nothing new and have been dealt with.''

Brent crude oil for January settlement declined 47 cents, or 0.9 percent, to $51.84 a barrel on London's ICE Futures Europe exchange, the lowest settlement since Jan. 18, 2007.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.