Crude oil may rise next week on speculation that interest-rate cuts in the US and China, the two biggest energy consuming countries, will bolster fuel demand.
Sixteen of 28 analysts surveyed by Bloomberg News, or 57 per cent, said prices will increase through November 7, the most bullish response since the week ended August 15. Six respondents, or 21 per cent, said oil will decline and six forecast little change. Last week 41 per cent expected futures to decline.
Oil climbed more than $4 a barrel on October 29, after the US and China cut interest rates to spur economic growth. European Central Bank President Jean-Claude Trichet said this week that the bank may lower borrowing costs next month. Oil prices have tumbled since July on signs that the economic slowdown in the US and Europe is spreading to emerging economies.
“There's the potential for a rally after the biggest sell-off in history,” said Peter Beutel, president of energy consultant Cameron Hanover Inc in New Canaan, Connecticut. “We've seen demand stabilise a little bit, a sign that the worst is over. We're also entering the fourth quarter when demand picks up as temperatures drop.”
US fuel demand during the past four weeks averaged 18.9 million barrels a day, down 7.8 per cent from a year ago, an Energy Department report showed October 29. Demand in the four weeks ended October 10 averaged 18.6 million barrels a day, down 9.9 per cent from a year earlier and the lowest since July 1999.
Crude oil for December delivery rose $1.81, or 2.8 per cent, to $65.96 a barrel so far this week on the New York Mercantile Exchange. Prices have dropped 55 per cent from the record $147.27 a barrel reached on July 11.
The oil survey has correctly predicted the direction of futures 50 per cent of the time since its start in April 2004.