By Mark Shenk
Dec. 12 (Bloomberg) -- Crude oil may rise next week on signs that OPEC will lower production targets at a Dec. 17 meeting in Algeria to stem a five-month slump in prices.
Twenty of 38 analysts surveyed by Bloomberg News, or 53 percent, said prices will increase through Dec. 19. Thirteen respondents, or 34 percent, forecast oil will be little changed and five said there will be a decline. Last week 49 percent expected futures to drop. The latest survey was completed before the U.S. Senate rejected a $14 billion bailout plan for automakers.
OPEC’s previous supply reductions aren’t enough, and the group will need to make a “substantial” additional cut at next week’s meeting, Shokri Ghanem, Libya’s top oil official, said in a Bloomberg TV interview yesterday. Oil has dropped 25 percent since the Organization of Petroleum Exporting Countries announced a 1.5 million-barrel-a-day output cut on Oct. 24 in Vienna.
“The market may well see some short covering ahead of the Dec. 17 OPEC meeting, and could continue higher afterward if they cut production quotas by a sufficient amount,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York.
Short covering occurs when traders buy contracts to close out bets that prices will decline.
Crude oil for January delivery has risen $4.67, or 11 percent, to $45.48 a barrel so far this week on the New York Mercantile Exchange. Prices have dropped 69 percent from the record $147.27 a barrel reached on July 11.
The oil survey has correctly predicted the direction of futures 50 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
20 13 5
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
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