Feb. 26 (Bloomberg) -- U.S. oil inventories probably rose to the highest level in seven months as production climbed to the most in more than 20 years, a Bloomberg survey showed, signaling prices may extend this month’s 4.5 percent retreat.
Stockpiles grew by 2.5 million barrels, or 0.7 percent, to 378.9 million in the seven days ended Feb. 22, the highest since July 20, according to the median of eight analyst estimates before an Energy Information Administration report tomorrow. That would be a sixth weekly gain, the longest streak of advances since May. All the respondents forecast an increase.
Output may have risen again after the EIA, the Energy Department’s statistical arm, reported an increase in production to 7.12 million barrels a day in the week ended Feb. 15, the most since August 1992. Stockpiles also may have gained as imports increased. West Texas Intermediate oil is heading for the first monthly loss since October as petroleum demand dropped 3.3 percent in the seven days ended Feb. 15.
“Production is not slowing down and imports are going to be higher,” Kyle Cooper, director of commodities research at IAF Advisors in Houston, said yesterday in a phone interview. “Overall that adds up to increasing inventories. U.S. consumption is already poor and that’s giving pause to prices.”
WTI for April delivery fell as much as 1.3 percent to $91.92 a barrel in electronic trading today on the New York Mercantile Exchange. Futures closed at $97.94 on Jan. 30, the highest settlement since Sept. 14. Prices are up 0.7 percent this year.
U.S. domestic oil output is 22 percent higher than a year ago, according to EIA. Production has climbed in 22 of the past 24 EIA reports. A combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies trapped in shale formations in states including North Dakota, Texas and Oklahoma, helping the U.S. meet 84 percent of its energy needs in the first 11 months of the year, on pace to be the highest annual level since 1991, EIA data show.
Prices fell to $92.84 on Feb. 21, the lowest settlement this year, after the government agency said U.S. inventories rose 4.14 million barrels in the week ended Feb. 15 to 376.4 million, the fifth consecutive increase.
Crude stockpiles at Cushing, Oklahoma, the delivery point for New York futures, climbed 417,000 barrels to 50.7 million barrels. Supplies at the hub rose to a record 51.9 million barrels in the week ended Jan. 11.
Shipping volumes on the Seaway pipeline, which moves oil from Cushing to the Gulf Coast, are expected to average 295,000 barrels a day between February and May, short of its capacity of 400,000 barrels, according to Enterprise Products Partners LP’s, the line’s co-owner.
“Fundamentally it’s a bearish market,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “Imports are going to be higher and we have slow runs out of Seaway.”
U.S. output will average 7.25 million barrels a day this year and 7.82 million next year, up from 6.44 million in 2012, the EIA said in a monthly report on Feb. 12. WTI oil will average $92.81 a barrel this year and $92.17 in 2014, down from last year’s $94.21, the EIA predicted.
Supplies may also have risen last week as more overseas shipments reached the U.S. Imports increased 2.3 percent in the week ended Feb. 15 to 7.69 million barrels a day. Shipments averaged 8.52 million in the past 12 months.
“Crude supplies are expected to show another significant seasonal build,” Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois-based consulting company, said yesterday in an e-mail. “A further rebound in imports toward 8 million barrels a day is anticipated.”
Refineries kept their operation rates at a low level, reducing their demand for crude oil. The utilization rate fell to 82.9 percent in the week ended Feb. 15, the least since March 16. The rate may have climbed 0.1 percentage point last week to 83 percent, according to the survey.
Units are often idled for maintenance in the second half of January as attention shifts away from heating oil and before gasoline use rises.
Inventories of distillate fuel, a category that includes heating oil and diesel, probably fell 1.55 million barrels, or 1.3 percent, to 122.1 million, according to the median of responses. A decline of that size would leave supplies at the lowest level since December. All eight analysts forecast a drop.
Gasoline stockpiles probably decreased 1 million barrels, or 0.4 percent, to 229.4 million barrels, according to the survey. Six respondents said there was a decrease and two said there was a gain.
The EIA is scheduled to release the weekly report at 10:30 a.m. tomorrow in Washington.