Jan. 5 (Bloomberg) -- Crude oil may fall next week, extending a 12 percent decline from mid-December, as mild U.S. weather reduces heating-fuel demand in the world's biggest energy consumer.

Fourteen of 29 analysts, traders and brokers, or 48 percent, said prices will drop, according to a Bloomberg News survey. Eight expected an increase and seven forecast little change. It was the most bearish response since the week ended Sept. 22. Last week, 46 percent of respondents said prices would rise.

Above-normal temperatures will cover the eastern U.S. from Jan. 10 through Jan. 14, the National Weather Service said yesterday. The Northeast accounts for 80 percent of the nation's heating-oil use. U.S. inventories of gasoline and distillate fuel, a category that includes heating oil and diesel, surged last week, an Energy Department report showed yesterday.

``The weather is a huge factor weighing on this market,'' said Ric Navy, a broker at BNP Paribas SA in New York. ``We've already gone through a lot of the winter. The supply situation has changed.''

Crude oil fell 7.8 percent this week on the New York Mercantile Exchange, the biggest decline since the week ending April 29, 2005, when prices slid 10 percent. Oil for February delivery rose 72 cents, or 1.3 percent, to $56.31 a barrel today.

``We've fallen more than $5 in two days, which has caught a lot of people flat-footed,'' Navy said. ``We've taken out various levels, so the market looks technically weak as well.''

Warm Weather

Yesterday's close was the lowest since June 15, 2005. The futures market was shut Jan. 1 for the New Year's holiday. There was no floor trading on Jan. 2 because of the funeral of former U.S. President Gerald R. Ford.

The decline may accelerate because prices ended yesterday's session below $55.81 a barrel, a so-called support level where futures closed on Nov. 17, according to traders who watch charts to predict price movements.

The world is likely to experience its warmest recorded year in 2007 because of the effects of the El Nino weather pattern and global warming, the U.K. government's weather forecasting division said yesterday. There is a 60 percent chance that this year will be hotter than 1998, the current warmest year, according to the Met Office based in Exeter, England.

The main factor behind the prediction is the onset last year of El Nino, a warming of the eastern Pacific's equatorial waters that occurs every two to seven years, the Met office said.

Supplies of distillate fuel, a category that includes heating oil and diesel, jumped 1.97 million barrels to 135.6 million last week, the biggest increase since the week ended Sept. 22, the Energy Department reported yesterday. Gasoline stockpiles rose 5.68 million barrels to 209.5 million barrels, also the biggest one-week gain since the week ended Sept. 22.

OPEC Production

Analysts looking for an increase in prices cited the Organization of Petroleum Exporting Countries decision to cut production. The group, which pumps 40 percent of the world's oil, will lower output on Feb. 1, the second reduction in three months, to try to stem a decline in prices.

The OPEC basket, which consists of a weighted average of 11 grades, fell 69 cents to $55.39 a barrel on Jan. 3. The basket price has plunged 24 percent from a record $72.64 on Aug. 8.

``We believe that OPEC will defend a basket of $50 a barrel which is about $55 a barrel'' for oil traded in new York, said Antonio Szabo, chief executive officer of Houston-based consultant Stone Bond Technologies. ``The seriousness of this internal target will take time to get out to the marketplace.''

The oil survey has correctly predicted the direction of prices 52 percent of the time since it was introduced in April 2004.

     Bloomberg's survey of oil analysts and traders, conducted
each Thursday, asks for an assessment of whether crude oil
futures are likely to rise, fall or remain neutral in the coming
week. The results were:

                    RISE      NEUTRAL    FALL
                     8           7        14

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

Last Updated: January 5, 2007 15:38 EST