BLOOMBERG: Crude Oil Futures Decline as U.S. Supplies Gain Before Winter: “Royal Dutch/Shell Group Chief Executive Officer Jeroen van der Veer said yesterday world supplies are plentiful and he expects oil prices to decline over the next year as global demand for crude slows.”: “``In a year's time, prices will ease,'' Van der Veer said in an interview on the British Broadcasting Corp.'s ``Breakfast with Frost'' program. ``At the moment, there are enough stocks. There is no real alarm.'' (ShellNews.net) 15 Nov 04

Nov. 15 (Bloomberg) -- Crude oil futures fell to the lowest in almost two months on speculation rising inventories and refining output will ensure heating oil supplies are adequate to meet winter fuel demand.

Oil supplies in the U.S. have increased for the past seven weeks, according to the Energy Department. Royal Dutch/Shell Group Chief Executive Officer Jeroen van der Veer said yesterday world supplies are plentiful and he expects oil prices to decline over the next year as global demand for crude slows. Prices have fallen 19 percent from a record $55.67 a barrel on Oct. 25.

``Finally the fundamentals are catching up'' and causing prices to fall, said Anthony Nunan, manager of international petroleum business at Mitsubishi Corp. in Tokyo. ``The inventory level is still relatively tight going into the winter but not tight enough to justify $55 a barrel.''

Crude oil for December delivery fell as much as 53 cents, or 0.9 percent, to $46.79 a barrel in after-hours electronic trading on the New York Mercantile Exchange. That was the lowest for a most-active contract since Sept. 22. Oil traded at $46.90 at 3:37 p.m. Singapore time. Prices are still 48 percent higher than a year ago.

The increased price of oil over the past year is likely to damp demand, leaving enough capacity for prices to begin easing Shell's Van der Veer said. Shell is Europe's second-largest publicly traded oil company.

``In a year's time, prices will ease,'' Van der Veer said in an interview on the British Broadcasting Corp.'s ``Breakfast with Frost'' program. ``At the moment, there are enough stocks. There is no real alarm.''

Record Prices

Oil futures will probably slide this week on increased global production and speculation that demand growth is slowing, according to a survey by Bloomberg News survey of 47 traders and analysts on Nov. 11.

Thirty, or 64 percent, of those surveyed, said oil prices would drop. It was the most bearish reading in the 31 weeks the survey has been run. Thirteen expected prices to rise and four said oil would be little changed. A week earlier, 50 percent said prices would decline.

Economic growth in Japan, the third-biggest oil consumer, slowed to a 0.3 percent annual pace in the third quarter, a government report said last week. The economy of the 12 nations sharing the euro grew at the slowest pace in more than a year in the third quarter as record oil prices crimped global demand, prompting the European Commission to cut its forecast for the current quarter.

Inventories

U.S. crude oil inventories have jumped 8 percent to 291.5 million barrels since Sept. 17 as imports surged, according to the Energy Department's report on Nov. 10. Refineries have boosted their operating rates and output of distillate fuels, including heating oil, the department's figures show.

``The stock levels are high,'' said P. Sugavanam, director of finance, Indian Oil Corp., the country's largest refiner. ``With such inventory position, we may see crude oil falling to $45 a barrel in the coming weeks in spite of the winter demand for heating oil.''

Refineries operated at 92.6 percent of their capacity in the week ended Nov. 5, a 3.2 percentage-point increase from a week earlier, the department said. It was the first time they exceeded 90 percent of capacity since the week ended Sept. 10, before Hurricane Ivan hit the Gulf of Mexico, shutting many refineries and crimping imports and oil production.

Iraq Attack

Oil prices have risen to a record this year partly on concern terrorist attacks may disrupt production in the Middle East. Four bombs exploded near oil wells in the Kirkuk region of Iraq, triggering fires in the field at Al-Khabaza, Agence France- Presse reported, citing a security official.

Oil futures reached a record $55.67 a barrel on Oct. 25.

The wells, 30 kilometers (20 miles) from Kirkuk, were attacked yesterday, the news service said, quoting Anuza Daali, security officer for the field. Attempts are being made to put the fires out, and it isn't clear whether production was affected by the attack, AFP said.

To contact the reporters on this story:

Gavin Evans in Wellington, New Zealand at gavinevans@bloomberg.net

Manash Goswami in New Delhi at (91) at mgoswami@bloomberg.net

To contact the editor responsible for this story:

Peter Langan at plangan@bloomberg.net

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