(Updated prices in eighth paragraph.)
Oct. 4 (Bloomberg) -- West Texas Intermediate crude will probably decline next week on concern that a political impasse in Washington over the budget could lead to a recession, a Bloomberg survey showed.
Eighteen of 30 analysts, or 60 percent, forecast crude will decrease through Oct. 11. Six respondents, or 20 percent, predicted an increase and six said that there would be no change. Last week, 48 percent of analysts projected a decrease.
A partial government shutdown is entering its fourth day. The Treasury Department warned yesterday that a federal default could lead to a recession as bad as the 2008 financial crisis or worse. President Barack Obama urged House Speaker John Boehner to hold a vote on funding federal operations without strings attached, saying that that would end the crisis. Reports this week showed that U.S. crude and natural gas supplies rose.
“The government shutdown will have a big impact on our already-disappointing economic data and make a case for less demand,” Tom Power, senior commodities broker at RJO Futures in Chicago, said yesterday. “We’re seeing equities sell off and we had huge builds in oil and gas. I wouldn’t be surprised to see WTI break below $100 a barrel next week.”
The government will run out of borrowing authority Oct. 17, according to the Treasury, leaving only cash to pay the bills. A U.S. default caused by Congress failing to raise the $16.7 trillion federal debt limit could have catastrophic consequences that might last decades, Treasury said in a report yesterday.
The Institute for Supply Management’s U.S. non- manufacturing index fell to 54.4 in September from 58.6, the Tempe, Arizona-based group said yesterday. That was below the median estimate of 57 in a Bloomberg survey of economists.
U.S. crude inventories surged 5.47 million barrels to 363.7 million last week, the biggest gain since April, according an Energy Information Administration report on Oct. 2. Stockpiles of natural gas, a competing fuel, increased 101 billion cubic feet in the week ended Sept. 27 to 3.487 trillion cubic feet, the EIA said yesterday.
Front-month crude futures increased 97 cents, or 0.9 percent, to $103.84 a barrel this week on the New York Mercantile Exchange. Prices are up 13 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
6 6 18
--With assistance from Grant Smith in London, Tsuyoshi Inajima in Tokyo and Winnie Zhu, Pratish Narayanan and Ann Koh in Singapore. Editors: Margot Habiby, Charlotte Porter