Crude see-saws, supply seen stable for now

Crude see-saws, supply seen stable for now

London (Platts)--19Oct2004


Crude futures prices see-sawed Tuesday, US light crude in New York opening a
dollar down on the previous close and trading at an intra-day low of
$52.59/bbl, subsequently recovering to regain most of the losses and then fall
back again below $53/bbl. Traders with long positions have been liquidating
them ahead of Wednesday's contract expiry, although the supply fears that
drove prices to record highs in the past few days remain intact. NYMEX crude
has lost around $2/bbl since rocketing Monday to a new all-time high of
$55.33/bbl. Energy consultant Jim Ritterbusch said in a report that the lower
prices partly reflected stable flows of oil--at least for the time
being--"from key areas of concern" Nigeria, Iraq and Russia. Barclays Capital
analyst Kevin Norrish noted that US inventory levels had moved back above
normal levels for the time of year. North Sea Brent futures on London's IPE
dived to $47.90/bbl from Monday's $48.91/bbl close but recovered to around
$48.28/bbl in London's late afternoon.

Analysts are forecasting a build in US crude inventories for the fourth week
running, with the latest build projected at around 2-mil barrels when the US
energy department releases its weekly report Wednesday. But the current
concern is less about crude than about middle distillates, which fell by
2.44-mil bbl in the week to Oct 8, spurring fresh jitters over low heating oil
stocks ahead of the winter. This week, analysts expect a distillates draw of
1.2-mil bbl. Gasoil stocks are also below normal seasonal levels in Germany, a
key European market. Fears about crude supply appeared to have receded
Tuesday, although 470,000 b/d of hurricane-hit Gulf of Mexico output remains
shut in. And while a four-day strike in Nigeria--one of the US's top five
foreign crude suppliers--ended Thursday with no export disruption, unions have
warned it could resume if a retail fuel price hike is not reversed. A dispute
between rig owners and workers offshore Norway has also caught traders'
attention, with 55,000 b/d of crude output shut in by strike action.

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