Eighteen of 42 respondents, or 43 per cent, said oil prices will drop, compared with 40 per cent that correctly predicted a decline in the previous weekly survey. "Unseasonably warm temperatures over the holiday weekend should further undermine heating oil prices and cause crude oil to fall," said John Kilduff, senior vice-president of energy risk management with Fimat USA. Oil may fall below US$40 a barrel "as soon as next week." Still, forecasts in the survey were almost evenly split because of some analysts' concern that US temperatures may drop or attacks in the Middle East threaten oil supplies. Seventeen respondents, or 40 per cent, expected prices to rise this week, while seven forecast little change. Crude oil for February delivery fell 73 cents, or 1.7 per cent, to US$43.45 a barrel on the New York Mercantile Exchange in the four trading days ended on Thursday, compared with the close on December 23. The market was closed December 24 and futures did not trade on Friday. Prices have declined 22 per cent since reaching US$55.67 a barrel on October 25, the highest since futures began trading in New York in 1983. Prices rose 34 per cent in 2004 and averaged a record US$41.47 a barrel as demand surged and unrest in Iraq, Saudi Arabia and Nigeria threatened shipments. Ten of the last 14 surveys correctly predicted the market's direction. From last Friday through January 6 heating demand in the US Northeast will be 38 per cent below normal, forecaster Weather Derivatives Inc of Belton, Missouri, said. The region consumes about 80 per cent of the heating oil used by US homeowners. Heating oil for January delivery fell 9.64 cents, or 7.3 per cent, to US$1.2297 a gallon in New York in the four trading days ended on Thursday, compared with the close on December 23. Heating oil futures rose 37 per cent this year and touched a record US$1.603 a barrel on October 22. "Winter fuel-supply concerns have been the last leg supporting prices and that concern has been virtually obviated," Kilduff said. Stockpiles of distillate fuel, a category that includes heating oil and diesel, have risen in five of the six weeks ended December 24, according to the Energy Department. Supplies rose 4 per cent during that period. "The rate of stock gains over the fourth quarter has been quite high," said William Buchanan, senior energy trader for Standard Bank in London. "It's remarkable how much stocks have" increased. Crude-oil supplies have risen in 12 of the last 14 weekly reports by the department. Supplies of 295.1 million in the week ended December 24 were 9 per cent higher than a year earlier. Some analysts said prices would rise because of concern that unrest in oil-exporting countries such as Saudi Arabia would curtail shipments. "Terrorism fears and the threat of a cold US winter should be enough to push oil higher this week," said Daniel Hynes, resources analyst at Australia & New Zealand Banking Group Ltd in Melbourne. "We expect this will be a short-term trend. Overall, increasing supply and stocks will result in the price returning to its downward trend early 2005." Crude oil in New York surged 4.5 per cent on December 29 on reports of terrorist attacks in Riyadh, Saudi Arabia. Oil facilities were not damaged in the blasts. "Although there is plenty of crude oil in the market, sensitivities are high to political risk issues such as (last) Wednesday's blasts in Saudi Arabia even if oil production isn't directly targeted," said Marshall Steeves, an analyst at Refco Group Inc in New York. Prices will decline in 2005 and average US$39 a barrel for the year because of reduced demand and increased supplies from the Organization of Petroleum Exporting Countries and Russia, a Bloomberg survey earlier this month showed. Futures will average US$43 a barrel in the first quarter, according to the median forecast among 24 analysts polled. PIN//China Daily