Oil May Rise on Forecast for U.S. Supply Drop, Survey Shows

By Mark Shenk

Sept. 5 (Bloomberg) -- Crude oil may rise next week on forecasts that a government report will show U.S. inventories fell because of Hurricane Gustav.

Twelve of 28 analysts surveyed by Bloomberg News, or 43 percent, said prices will increase through Sept. 12. Ten of the respondents, or 36 percent, said oil will decline and six said prices will be little changed. Last week 38 percent expected futures to increase.

Gustav made landfall in Louisiana on Sept. 1 as a Category 2 hurricane. The storm caused producers to shut all oil output from platforms in the Gulf of Mexico. The Gulf accounts for 26 percent of U.S. oil production. The Energy Department is scheduled to release its report on this week's inventories on Sept. 10.

``I think that the disruptions to tanker traffic in the Gulf and refinery operations will see lower inventories, and the market will interpret this as bullish, but not very strongly so,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

Crude oil for October delivery dropped $7.57, or 6.6 percent, to $107.89 a barrel so far this week on the New York Mercantile Exchange. Futures have dropped 27 percent since touching $147.27 a barrel on July 11, the highest since trading began in 1983.

The oil survey has correctly predicted the direction of futures 49 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 6 10

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