By Grant Smith and Christian Schmollinger Jan. 6 (Bloomberg) -- Oil traded near a 14-month high in New York before a government report forecast to show U.S. fuel supplies fell as the country’s east faces its coldest winter in three decades. The Energy Department is forecast to show distillate stockpiles, including heating oil, dropped 1.85 million barrels, according to a Bloomberg survey before today’s report. The eastern half of the U.S. is facing its coldest winter since 1982, AccuWeather.com said on its Web site, as Arctic air from Canada spreads south. “In the entire northern hemisphere we’ve got the first sustained blast of winter,” Mike Wittner, head of oil market research at Societe Generale, said in a television interview. “I don’t expect the prices to keep on going onwards and upwards forever. We could go up another couple of dollars from here.” Crude oil for February delivery was at $81.56 a barrel, down 21 cents, in electronic trading on the New York Mercantile Exchange at 11:57 a.m. London time. Yesterday, the contract rose 26 cents to $81.77, the highest settlement since Oct. 9, 2008. Oil had climbed nine days through yesterday, the longest winning stretch since July. Temperatures in northern China may drop as low as minus 32 degrees Celsius (minus 26 degrees Fahrenheit) this evening to tomorrow night, the China Meteorological Administration said. Beijing recorded a temperature of negative 20 degrees Celsius last night, the agency said. China is the world’s second-largest oil user. Heating demand in the U.S. Northeast may be 11 percent above normal through Jan. 12, according to forecaster Weather Derivatives. Temperatures in the region, which consumes about four-fifths of U.S. heating oil, are forecast to remain below normal through Jan. 15 by the National Weather Service. ‘Cold Weather’ “Clearly the weather has helped to boost prices,” Harry Tchilinguirian, senior oil analyst with BNP Paribas, said in a television interview. ‘But fundamentals are still weak despite the recovery in manufacturing. The supply situation remains quite ample, especially in the U.S. We don’t think we can go much higher, and corrections could be fast.” An Energy Department report today may show stockpiles of crude oil declined 1 million barrels from 326 million, based on the median estimate of 15 analysts surveyed by Bloomberg News. The American Petroleum Institute said yesterday that U.S. crude supplies dropped 2.27 million barrels last week. Distillate Fuel Supplies of distillate fuel, a category that includes heating oil and diesel, increased 962,000 barrels to 162.6 million last week, according to the API report. Refiners typically perform maintenance towards the end of the first quarter as demand for heating fuels ebbs and they reconfigure units for producing gasoline. Royal Dutch Shell Plc plans to shut units at its Pernis refinery, Europe’s largest, in the Netherlands for maintenance starting next month, people familiar with the situation said. Oil-supply totals from the API and Energy Department moved in the same direction 76 percent of the time in the past four years, according to data compiled by Bloomberg. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey. Brent crude oil for February settlement traded at $80.39 a barrel, down 20 cents, on the London-based ICE Futures Europe exchange at 11:18 a.m. local time. Yesterday, the contract rose 47 cents, or 0.6 percent, to end the session at $80.59. To contact the reporters on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net

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