IPE Brent drifts lower on profit-taking, extending downward trend

London (Platts)--25Oct2005

Brent crude futures on London's International Petroleum Exchange drifted
lower as the ongoing downward spiral in prices continued in the aftermath of
Hurricane Wilma, traders said Tuesday. 
    "There is very little to keep prices up at the levels we have seen
recently," one traders said. By 1009 London time, the front-month December
Brent futures contract was trading just below Monday's settlement at
$58.20/bbl, having dropped as low as $58/bbl earlier in the day.
     Brokers saw support for the front-month Brent contract at $57/bbl, but
said it would require a settlement at or below this level to drive prices
sharply lower. "Some selling by the hedge funds has been cited as a
contributory factor to the recent weakness", a broker with Bache Financial
said. 
     The fear about insufficient heating oil stocks this winter appeared to be
unfounded so far with the contango in the gasoil market since mid-August
encouraging traders to store material. 
     The latest round of stock data from the US Department of Energy showed
that heating oil stocks were 6.4-mil bbl above year ago levels and 2.6-mil bbl
above the five-year average. 
     With a market in contango, traders typically look to move material into
storage to take advantage of the cheaper prompt prices to be able to sell
material at a higher price at a point in the future.
--Paul Wightman, paul_wightman@platts.com

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