Crude Oil May Fall Next Week Amid Waning Demand, Survey Shows

By Margot Habiby

Aug. 8 (Bloomberg) -- Crude oil may fall next week amid weakening demand caused by a global economic slowdown.

Thirteen of 35 analysts surveyed by Bloomberg News, or 37 percent, said prices will drop through Aug. 15. Twelve of the respondents, or 34 percent, said oil will rise and 10 forecast little change. Last week 45 percent expected a decline.

``Growing evidence of weak demand should discourage buying,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

U.S. fuel demand averaged 20.1 million barrels a day during the four weeks ended Aug. 1, down 2.6 percent from a year earlier, the Energy Department said Aug. 6.

U.S. gasoline demand fell for a 15th consecutive week as high prices caused motorists to drive less, a MasterCard Inc. report Aug. 5 showed. Demand last week dropped 3.4 percent from a year earlier, MasterCard, the second-biggest credit-card company, said in a weekly report.

U.S. gasoline supplies fell 4.34 million barrels, or 2 percent, to 209.2 million barrels in the week ended Aug. 1, the biggest drop since April, according to Energy Department data released Aug. 6. Those figures and a 20 percent drop in crude prices since a record $147.27 a barrel set July 11 have other analysts forecasting prices will rise.

``The gasoline number was a little surprising, and we maybe moved down a little too fast too soon to the downside,'' said Ryan McCabe, director of trading at Haly Oil & Acquisition in Malvern, Pennsylvania.

Higher Production

The Organization of Petroleum Exporting Countries increased oil production 0.7 percent in July, as Saudi Arabian output reached a three-year high and Nigerian production rose to the highest since March, a Bloomberg News survey showed.

Crude oil for September delivery fell $5.08, or 4.1 percent, to $120.02 a barrel so far this week on the New York Mercantile Exchange. Futures reached $147.27 a barrel on July 11, the highest since trading began in 1983. Oil touched $117.11 a barrel on Aug. 6, down more than 20 percent from the record, a threshold often seen as the start of a bear market.

The oil survey has correctly predicted the direction of futures 48 percent of the time since its start 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
12 10 13

To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.