Brent crude futures fall as US refiner maintenance draws to close

Brent crude futures fall as US refiner maintenance draws to close

London (Platts)--27Apr2006

Brent crude futures in London continued to lose ground extending
Wednesday's losses on a bout of profit-taking following the latest US stock
report which appeared to be bearish, brokers said.
The front-month June futures contract has traded down 77cts to $71.32/bbl
and had been as low as $71.20/bbl earlier in the day by 0929GMT. Crude prices
have fallen over $2/bbl since Tuesday's close, partly helping to offset the
$5.70/bbl surge in prices since April 10.
The smaller than expected drawdown in gasoline inventories coupled with a
surge in gasoline imports and a large rise in crude refinery runs were the
catalyst for Wednesday's sell off, traders said. The US Department of Energy
said that gasoline inventories slipped 1.9 million barrels, but refinery runs
soared 2% to 88.2%, the highest level since early January. At the same time,
gasoline imports ramped up 431,000 b/d to 1.338 million b/d as an armada of
ships headed across the Atlantic from Europe, the US DOE said.
Brokers cautioned that the gasoline market was looking less healthy than
it had done recently with comments by US President George Bush to try to get
gasoline waivers in place to prevent gasoline shortages this summer. However,
traders have suggested that any gasoline waivers are unlikely to have any
significant impact on lowering gasoline prices.
Mike Wittner, oil analyst with Calyon in London said that refiners have
invested large amounts of money in producing MTBE free gasoline and therefore
would not be keen to see waivers put in place.
Crude oil stocks fell 200,000 barrels with a significant build in Padd V
on the dislocated west coast. US inventories stand at 36 million barrels above
the 5 year average. Interestingly, crude stocks at Cushing, the delivery point
for the NYMEX light sweet crude, stood at over 25 million barrels. The full
tanks led to the May/June cash WTI spread tumbling to $6/bbl contango at the
expiry Tuesday.
Elsewhere, middle distillate stocks rose 1 million barrels against a
projected drawdown of 1.55 million barrels. Some players have suggested that
the run up in crude runs was a contributing factor in the distillate stock
build.
--Paul Wightman, paul_wightman@platts.com

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