Business | Oil & Gas
Crude could fall on decline in US fuel consumption
Crude oil prices may fall this week as the dollar rebounds and the slowing US economy curbs fuel consumption.
- Bloomberg
- Published: 23:47 March 21, 2008
Dallas: Crude oil prices may fall this week as the dollar rebounds and the slowing US economy curbs fuel consumption.
Twenty-nine of 34 analysts surveyed by Bloomberg News, or 85 per cent, said prices will drop through March 27. Four respondents, or 12 per cent, said futures will rise and one forecast that prices will be little changed. A week ago, 43 per cent said oil would decline.
The dollar rose, triggering an exodus from commodities, after the Federal Reserve cut the overnight-lending rate by 0.75 per cent to 2.25 per cent on March 18. Total implied fuel demand for the four weeks ended March 14 fell 3.2 per cent from a year earlier, according to the Energy Department.
"With the dollar poised for a comeback, we see potential for an ongoing wave of long liquidation out of the crude oil market," said Tim Evans, an energy analyst at Citigroup Global Markets in New York. Oil supply may be 1.5 million barrels a day over demand in the second quarter, he said.
Energy and metals prices have surged in the past year as the dollar plunged, prompting investors to seek a hedge against inflation.
US crude-oil stockpiles rose 133,000 barrels the previous week to 311.8 million barrels in the ninth increase in stockpiles in 10 weeks, the Energy Department reported March 19.
Crude for May delivery fell $6.90, or 6.4 per cent, to $101.84 a barrel last week on the New York Mercantile Exchange. It was the first weekly decline in seven. Futures reached $111.80 a barrel on March 17, the highest price since trading began in 1983.
Analysts had forecast that prices would drop for the past 10 weeks. They were correct in three of those weeks. The survey has correctly predicted the direction of prices 51 per cent of the time since its introduction in April 2004.
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