Oct. 10 (Bloomberg) -- Crude oil prices are poised to rebound from an 11 percent drop since Aug. 30 as demand recovers after hurricanes Katrina and Rita, according to a survey of analysts.

Oil forecasters, who've been wrong about the rise in crude oil for more than a year, expect prices in New York to average $65 a barrel this quarter and $62.25 in the first three months of next year, compared with $61.84 on Oct. 7, according to the median projection of 20 firms surveyed from Oct. 3 to Oct. 6.

Oil has dropped from a record $70.85 in New York on Aug. 30. Oil shares last week had their biggest decline since January 2003 as gasoline demand waned and refinery shutdowns left a glut of crude. The slowdown may just be a blip, said Phil Flynn, vice president of risk management at Alaron Trading Corp. in Chicago.

``People who say we've reached the level where oil will slow economic growth and demand are probably wrong,'' said Flynn, who predicts $74 oil for all of 2006, the highest among those polled.

Oil declined 6.6 percent to $61.84 a barrel in New York last week. The Dow Jones Stoxx index of European oil and gas companies lost 7.2 percent, led by declines at Lundin Petroleum AB of Sweden, Neste Oil Oyj of Finland and OMV AV, Austria's biggest oil company.

Refining Capacity

Analyst estimates have consistently lagged behind the rally in oil, which has more than tripled from $20 at the start of 2002. Oil was at $61.80 a barrel on the New York Mercantile Exchange, down 4 cents, as of 6:52 a.m. London time.

The drop in oil prices in the 1990s to $10 a barrel restrained spending on new rigs and refineries. The lack of investment in new supply is creating bottlenecks now.

``There will probably be expansions and extensions at existing refineries,'' said John Browne, chief executive of BP Plc, in an interview last week with broadcaster Charlie Rose. ``The U.S. needs to re-examine its refineries, and I think we need to make sure that there aren't any regulatory or bureaucratic hurdles to expanding refineries in a proper and responsible way.''

Estimates for 2006 New York prices ranged from $51 predicted by Citigroup Inc.'s investment research analysts to Alaron Trading's $74. The median forecast for next year's average price was $59.50 for New York oil and $57 for London-traded Brent crude.

Supply Shock

``Oil prices may well have topped off for the year unless another supply shock were to emerge in the form of another Gulf tropical storm or disruption in the Middle East,'' said Marshall Steeves, an analyst at Refco Inc. in New York. The futures market ``doesn't show any expected easing in prices until 2007, when new supplies are likely to come into the market.''

The oil futures market shows traders expect oil will be about $63 a barrel at the end of 2006, before falling to $60.65 at the end of 2007 and about $57 in 2010.

While the hurricane season is waning, the threat of record prices remains, said Paul Horsnell, head of energy research at Barclays Capital in London.

``We forecast prices higher than $60 for four of the next five quarters, so with those averages there's every chance it could go above $70,'' said Horsnell, who expects prices to average $61 next year. ``Are prices going to move sharply lower? We say no.''

Demand Growth

Expanding economies in the U.S. and China, the two largest oil consumers, have led prices higher during the past two years. Global oil use jumped 3.7 percent in 2004, the biggest increase in a quarter-century, and may rise 1.6 percent this year, according to the Paris-based International Energy Agency.

The IEA's 26 member nations, including the U.S., Japan and Germany, released emergency fuel stockpiles last month for only the second time in 30 years because of Katrina.

A drop in U.S. oil demand since the storms, which sank offshore rigs and flooded refineries, may eliminate the need for more emergency releases, said Claude Mandil, the agency's executive director.

``It depends on whether the demand destruction we've seen in the U.S. is a lasting one or not,'' Mandil said in an Oct. 6 telephone interview from Paris. ``We're monitoring the situation closely to see whether there is a need for an additional stock release.''

The agency's own figures show demand may grow 2.1 percent next year to 85.3 million barrels a day.

High Pump Prices

U.S. gasoline demand in the week ended Sept. 30 was about 0.8 percent lower than a year earlier, according to the U.S. Energy Department. The nation's average pump price for regular gasoline was $2.932 a gallon on Oct. 6, up 51 percent in the past year, according to AAA, the largest U.S. motoring organization.

Prices reached a record $3.057 on Sept. 2, close to the levels of 1981, after adjusting for inflation.

The signs of lower demand may be misleading, because U.S. consumption often dips in October before recovering in the winter, when consumers burn more heating oil, said Flynn at Alaron Corp.

``The drop in demand is being exaggerated by the storm,'' he said. ``People that were evacuated are not driving, so I would argue that it's short term.''

Whether demand falls or not, Mandil says industrialized nations aren't doing enough to encourage energy conservation.

``There has been a failure of governments for many years on energy-efficiency measures,'' he said on Sept. 20. ``Consumers can't clearly listen to market signals and respond on their own.''

To contact the reporter on this story: Stephen Voss in London at sev@bloomberg.net

Last Updated: October 10, 2005 01:55 EDT