Oil May Fall on U.S. Consumption Drop, Survey Shows (Update1)

By Mark Shenk
June 20 (Bloomberg) -- Crude oil may fall next week because of reduced U.S. fuel consumption and signs that crude supplies will increase after a meeting in Saudi Arabia this weekend.
Thirteen of 28 analysts surveyed by Bloomberg News, or 46 percent, said prices will decline through June 27. Eight of the respondents, or 29 percent, said oil will rise and seven forecast little change. Last week 48 percent said futures would fall.
Fuel consumption averaged 20.4 million barrels a day in the past four weeks, down 1.3 percent from a year earlier, the Energy Department said June 18. Saudi Arabian King Abdullah has called for a meeting between oil producers and consumers on June 22 in the Red Sea port of Jeddah.
``The crude-oil market looks like it may, finally, be willing to take notice of faltering demand,'' said Tim Evans, an energy analyst for Citi Futures Perspective in New York. ``Any confirmed production increase from Saudi Arabia out of Sunday's producer- consumer summit would likely tip the market more firmly to the downside.''
Saudi Arabia plans to increase crude-oil production by 200,000 barrels a day, according to a statement yesterday from the kingdom's embassy in London. The statement didn't specify the timing of the increase. Oil Minister Ali Al-Naimi pledged on May 16 to boost output by 300,000 barrels a day in June.
The country has since indicated that it plans to announce a further addition at the coming meeting.
Crude oil for July delivery fell 24 cents to $134.62 a barrel this week on the New York Mercantile Exchange. Futures reached $139.89 a barrel on June 16, the highest since trading began in 1983.
Analyst responses have been bearish in 22 of the past 23 weeks. 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
8 7 13
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net. Last Updated: June 20, 2008 15:25 EDT