July 17 (Bloomberg) -- Crude oil may rise as better-than- expected second-quarter earnings bolster the outlook for a recovery in demand, a survey of analysts showed.

Seventeen of 37 analysts surveyed by Bloomberg News, or 46 percent, said futures will climb through July 24. Ten respondents, or 27 percent, forecast that prices will be little changed, and 10 expected a decline. Last week, 46 percent of analysts said oil would fall.

Futures will increase as second-quarter earnings beat analyst expectations, said Bill O’Grady, the chief market strategist for Confluence Investment Management in St. Louis. Prices may also increase as equity markets rise, he said.

U.S. stocks increased this week. The Standard & Poor’s 500 Index gained 7 percent in the past five days to 940.38.

“There’s a rising correlation between commodity prices and equities,” O’Grady said. “As equity prices rise, commodity prices rise, in part because as recovery comes, it will increase the demand for commodities.”

Oil is also benefiting from investors concerned that economic policies undertaken by the global community may be inflationary, O’Grady said. “If you’re worried about inflation, one of the ways you protect yourself is to buy commodities.”

Total U.S. daily fuel demand over the four weeks ended July 10 averaged 18.4 million barrels, down 6.1 percent from a year earlier, the Energy Department said on July 15.

Crude oil for August delivery rose $3.67, or 6.1 percent, to $63.56 a barrel this week on the New York Mercantile Exchange. Futures are down 57 percent from a record $147.27 reached on July 11, 2008.

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
                     17         10        10

To contact the reporter on this story: Jenny Gross in New York at Jgross15@bloomberg.net.

Last Updated: July 17, 2009 16:40 EDT