Oil may fall on growing Saudi output, fuel supply, survey shows

Crude oil may fall next week as Saudi Arabia increases oil output to lower prices and U.S. fuel supplies climb as slowing economic growth curbs consumption. Thirteen of 28 analysts surveyed by Bloomberg News, or 46 percent, said prices will fall through August 1. Five of the respondents, or 18 percent, said oil will rise and 10 forecast little change. Last week 45 percent expected a decline. Saudi Arabia said it would produce an extra 300,000 barrels of oil a day in June and another 200,000 barrels a day in July to curb record prices. The desert kingdom increased output by 280,000 barrels a day in June to 9.53 million barrels, the highest since March 2006, according to a Bloomberg News survey.

Crude oil futures fell 3.5 percent on July 23 after a U.S. Energy Department report showed that fuel stockpiles increased as consumption tumbled to the lowest since January 2007. Gasoline supplies rose 2.85 million barrels to 217.1 million barrels last week, leaving inventories 3.7 percent higher that the five-year average for the period, the department said.

"Between the increase in Saudi crude oil production in June and July, and the overstocked U.S. gasoline market, the downside looks wide open," said Tim Evans, an energy analyst for Citi Futures Perspective in New York.

Crude oil for September delivery fell $3.98, or 3.1 percent, to $125.49 a barrel so far this week on the New York Mercantile Exchange. Futures reached $147.27 a barrel on July 11, the highest since trading began in 1983.

The oil survey has correctly predicted the direction of futures 48 percent of the time since its start in April 2004.