IPE Brent surges on hurricane fears

London (Platts)--6Jul2005

Crude oil futures on London's Intetrnational Petroleum Exchange Wednesday
edged higher, consolidating Tuesday's gains as the threat of further
hurricanes in the US Gulf disrupted offshore production, traders said. 

The front-month August Brent futures contract traded to within 21cts of
$59/bbl, but subsequently fell to around $58.66/bbl by 0958GMT. "This market
refuses to lie down," one IPE broker said, referring to the likelihood of
fresh all-time high crude prices in London and New York. NYMEX crude futures
for August delivery hit a a peak of $60.13/bbl earlier Wednesday. 

The front-month August crude contracts hit all-time highs on June 27 in London
and New York of $59.59/bbl and $60.95/bbl, respectively. Hurricane Cindy,
which pushed crude futures back above $60/bbl Wednesday, had been downgraded
to a tropical storm with winds of around 70mph.

Meanwhile, out in the southeastern Caribbean, another tropical storm, Dennis,
continued to strengthen as it moved west, prompting Haiti, the Dominican
Republic, Jamaica and the Cayman Islands to post watches and warnings. Traders
said that the weakness in the front Brent spread was surprising given the
strength in the outright prices. The spread between the front two months on
the IPE has fallen from around -68cts to -118cts. Crude oil prices have soared
nearly $3/bbl since July 1, a rise of 5%. The distillate complex continued to
underpin prices with crack spreads surging higher. 

At 1730 London time Tuesday, the first forward quarterly crack was assessed at
$15.53/bbl, its highest level for over 4 years. In comparison, the first
forward quarterly gasoline crack spread was trading at $3.30/bbl, but it is
recognised that this (the Q4 2005) is typically a weak quarter for gasoline.

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