Crude Oil May Fall as Fuel Consumption Declines, Survey Shows

By Mark Shenk

Oct. 17 (Bloomberg) -- Crude oil may fall next week on concern that fuel consumption will weaken as the economic decline deepens.

Eleven of 28 analysts surveyed by Bloomberg News, or 39 percent, said prices will decrease through Oct. 24. Ten respondents, or 36 percent, said oil will rise and seven forecast little change. Last week 43 percent expected futures to decline.

U.S. fuel demand averaged about 18.6 million barrels a day during the past four weeks, the lowest since June 1999, according to a weekly supply report from the Energy Department, released yesterday. The U.S. consumes 24 percent of the world's oil.

``Fear about the economy, credit markets and demand is driving the oil market,'' said Christopher Edmonds, the managing principal of FIG Partners Energy Research & Capital Group in Atlanta. ``Oil will remain under pressure until we get more certainty about the economy.''

Output at U.S. factories, mines and utilities last month dropped 2.8 percent, the most since 1974, Federal Reserve figures showed yesterday. The Federal Reserve Bank of Philadelphia's general economic index fell to minus 37.5 this month, the lowest since October 1990, the bank said yesterday.

Crude oil for November delivery fell $7.85, or 10 percent, to $69.85 a barrel so far this week on the New York Mercantile Exchange. Futures touched $68.57 a barrel yesterday, the lowest intraday price since June 27, 2007. Prices have dropped 53 percent from the record $147.27 a barrel reached on July 11.

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
                     10          7        11

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