Analysts Are Split on Direction of Oil Prices, Survey Shows

By Blake Ellis

Oct. 16 (Bloomberg) -- Analysts surveyed by Bloomberg News were split over whether crude oil prices will rise or fall next week amid above-average inventories and prices that are the highest in a year.

Twelve of 31 analysts, or 39 percent, said futures will drop through Oct. 23. Another 12 respondents predicted that oil will rise. Seven said futures will be little changed. Last week, 38 percent of analysts said prices would fall.

“The bulls are saying it doesn’t matter about current supplies, that demand is going to go up,” said Phil Flynn, vice president of research at PFGBest in Chicago. “Bears are saying that we have a glut of supplies and these prices are unsustainable.”

Crude oil stockpiles rose 334,000 barrels to 337.8 million last week, according to a U.S. Energy Department report yesterday. The gain left inventories 9.6 percent higher than the five-year average for the period. Fuel demand rose 1.1 percent to an average of 18.9 million barrels a day.

Crude oil for November delivery rose $5.81, or 8.1 percent, to $77.58 a barrel so far this week on the New York Mercantile Exchange. Yesterday’s settlement was the highest since Oct. 14, 2008. Futures are up 74 percent this year.

The oil survey has correctly predicted the direction of futures 47 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         7         12

To contact the reporter on this story: Blake Ellis in New York at bellis9@bloomberg.net