Oil May Drop as Slower Growth Reduces Demand, Survey Shows
Oil may fall next week as signs of slowing economic growth increase concern that demand will decline, a Bloomberg survey showed.
Fourteen of 32 analysts, or 44 percent, forecast crude will drop through July 27. Twelve respondents, or 38 percent, predicted that futures will rise and six said there will be little change in prices. Last week, 42 percent of analysts projected a decrease.
More Americans than forecast filed first-time claims for unemployment insurance payments last week, the Labor Department reported yesterday. Sales of existing U.S. homes unexpectedly dropped in June and manufacturing in the Philadelphia region contracted for a third month in July.
“The economic fundamentals are very bearish and are getting more bearish every day,” said James Williams, an economist at WTRG Economics, an energy-research firm in London, Arkansas. “There will be weak demand for oil because of the weak economy.”
Applications for jobless benefits increased by 34,000 to 386,000 in the week ended July 14, higher than the 365,000 forecast by economists surveyed by Bloomberg, Labor Department figures showed.
Home purchases slid to a 4.37 million annual rate last month, an eight-month low, data from the National Association of Realtors showed. The Federal Reserve Bank of Philadelphia’s general economic index was minus 12.9 in July after minus 16.6 the month before. Readings of less than zero signal contraction.
Gasoline consumption fell 3.2 percent last week to 8.63 million barrels a day, the Energy Department reported on July 18. That’s 4.3 percent lower than a year ago.
Oil advanced $4.34, or 5 percent, to $91.44 a barrel this week on the New York Mercantile Exchange, a second consecutive gain. Prices are down 7.5 percent in 2012.
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 12 6 14
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