IPE Brent falls as Chevron restarts Mississippi refinery

London (Platts)--14Oct2005

Brent crude futures on the International Petroleum Exchange continued to
sell off early Friday despite closing above $60/bbl on the front-month
contract late on Thursday as ChevronTexaco announced the restart of its
325,000 b/d Pascagoula refinery in Mississipi.
     "The announced restart is a bearish indicator," one broker said. At 1056
London time, the front-month November Brent futures contract was trading 37cts
below the overnight settlement at $59.70/bbl, just above the intra day low of
$59.63/bbl. 

PRODUCT SHORTAGES LIKELY TO PERSIST
    Concerns over product shortages continued to persist and fears were
compounded by the threat of a strike to all of Total's French
refineries from as early as next week.
     UK consultant PEL said in a report on Friday that crude prices are likely
to find support during October from the strength in product prices due to the
tightness in supplies of gasoline and heating oil due to the hurricane related
disruptions in the US and the French refinery strikes.
     "This market is all headline driven," one broker said adding that prices
could easily be pulled in either direction depending on whether the news is
bullish or bearish. The November futures contract expires later in
the day at the close of business. 
     Spreads continued to strengthen, lessening the contango in the market,
which traders said was one supporting factor. On Thursday, the US Department
of Energy released its latest weekly stock figures showing that distillates
and gasoline fell by 3.4-mil and 2.7-mil respectively, outstripping analysts
expectations. On the crude side, rose by 1-mil bbl, slightly less than the
3-mil bbl that had been projected. Refinery utilisation also rose, up 5.1% to
74.9%, but at the same time, demand was falling against year ago levels, a
signal of a bearish market.
     Gasoline demand was 2.4% lower than year ago
levels and this was widely seen as one reason for the plunge in prices
Thursday. Some analysts also pointed to heavy liquidation out of the crack
spreads from the hedge funds as another catalyst for the small sell off.
Paul Wightman -- paul_wightman@platts.com

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