(Updates with settlement prices in eighth paragraph.)
Aug. 23 (Bloomberg) -- West Texas Intermediate crude will probably decline next week on speculation that demand from refineries will drop with the end of the peak-demand summer driving season, a Bloomberg survey showed.
Twenty of 33 analysts, or 61 percent, forecast crude will decrease through Aug. 30. Seven respondents, or 21 percent, predicted an increase and six said there would be no change. Last week, 54 percent of analysts forecast a dip.
The U.S. driving season began with the Memorial Day holiday in late May and ends with Labor Day on Sept. 2. Refineries schedule maintenance programs for September and October, when motor-fuel consumption ebbs and heating-oil use has yet to pick up. Plants have slowed output in the third quarter of each year since 1999, Energy Information Administration figures show.
“Prices should move lower because of the end of the driving season,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “You’re going to see demand for both gasoline and crude oil drop after the Labor Day holiday.”
Crude may also decline on signs that the Federal Reserve is likely to reduce economic stimulus this year. The record of a July 30-31 meeting, released on Aug. 21, showed members of the Federal Open Market Committee were “broadly comfortable” with Chairman Ben S. Bernanke’s plan to start curbing bond buying later this year if the economy improves.
The central bank’s $85 billion in monthly bond buying, known as quantitative easing, has weakened the U.S. currency and increased the appeal of dollar-denominated commodities as investments.
“We will soon find out how much of this year’s rally was caused by quantitative easing,” Lynch said.
Front-month crude futures fell $1.04, or 1 percent, to $106.42 a barrel this week on the New York Mercantile Exchange. Prices are up 16 percent this year.
The oil survey has correctly predicted the direction of futures 50 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
7 6 20
--With assistance from Grant Smith in London, Sarah Chen in Beijing and Winnie Zhu, Ramsey Al-Rikabi and Yee Kai Pin in Singapore. Editors: Richard Stubbe, Margot Habiby