Oil May Decline as Record Prices Curb Fuel Demand, Survey Shows

Crude oil may fall next week amid signs that record pump prices are crimping U.S. gasoline demand and as Asian countries cut subsidies that kept consumer prices for fuel artificially low.

Thirteen of 27 analysts surveyed by Bloomberg News, or 48 percent, said prices will decline through June 6. Eight of the respondents, or 30 percent, said oil will rise and six forecast little change. Last week, 48 percent said futures would increase. U.S. fuel consumption averaged 20.5 million barrels a day in the four weeks ended May 23, down 0.7 percent from a year earlier, the Energy Department said yesterday. Gasoline demand dropped 5.5 percent last week as prices at the pump reached records, according to MasterCard Inc., the second-biggest credit-card company. Indonesia, Taiwan, Sri Lanka and Pakistan have decided to raise fuel prices as the cost of subsidies mounts, and Malaysia plans to announce a revision to its subsidies on May 30. India's Oil Secretary, M.S. Srinivasan, said higher domestic gasoline and diesel prices are inevitable because of rising global prices. Crude oil for July delivery fell $6.10, or 4.6 percent, to $126.09 a barrel so far this week on the New York Mercantile Exchange. Futures reached $135.09 a barrel on May 22, the highest since trading began in 1983.Last week was the first time in 20 weeks that analysts forecast an increase in prices. The oil survey has correctly predicted the direction of futures 49 percent of the time since its introduction in April 2004.

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