Oil May Fall as Recession Cuts Fuel Consumption, Survey Shows

By Mark Shenk

Nov. 21 (Bloomberg) -- Crude oil may fall next week on speculation that demand will further decline as the recession in the U.S., Europe and Japan spreads to emerging markets.

Twenty of 34 analysts surveyed by Bloomberg News, or 59 percent, said prices will decline through Nov. 28. Five respondents, or 15 percent, said oil will rise and nine forecast markets will be little changed. Last week 55 percent expected futures to decline.

The Standard & Poor's 500 Index plunged to its lowest close in 11 years yesterday after reports signaled a deeper U.S. recession. The Organization of Petroleum Exporting Countries, the International Energy Agency and U.S. Energy Department slashed demand projections this month because of the economic outlook.

``Nymex oil futures will continue to fall in line with the erosion of the global economy,'' said Mordechai Abir, director of energy research at Burnham Securities Inc. in New York.

The crude oil contract for January delivery has fallen $8.18, or 14 percent, to $49.42 a barrel so far this week on the New York Mercantile Exchange. Futures have dropped 66 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
                    5          9         20

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