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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