IPE Brent extends climb on US gasoline stock draw, regional fears

IPE Brent extends climb on US gasoline stock draw, regional fears

London (Platts)--6Apr2006

IPE Brent futures extended gains Thursday on the back of a draw in US
gasoline stocks reported Wednesday and on ongoing concerns about developments
with Nigeria and Iran , traders said.
At 1150 London time (1050 GMT), the May contract traded 70 cents higher
to $67.80/barrel, 14 cent off the highest IPE Brent price since August last
year. The May/June spread remains very tight with June IPE Brent futures also
up 56 cents trading at $67.87/barrel.
On Wednesday, May front-month IPE Brent futures rose after the US
Department of Energy and American Petroleum Institute revealed a larger than
expected draw in gasoline stocks in the US, down 4.4 million barrels.
On Wednesday, the May IPE contract rose 71 cents settling at $67.10
having reached an inter-day high of $67.38/barrel. "The one thing that could
reign in this market is gasoline imports to the US," one broker said.
"Something similar happened a few months ago when gasoline imports to the US
dragged the market down."
The arbitrage for shipping non-oxygenated gasoline from Northwest Europe
to the US is open, with the US proving a strong draw of barrels since
production capacity in the US is severely impacted by a heavy schedule of
refinery maintenance, sources said.
While traders noted the strength in US markets, they said demand would
only continue in the short term until catalytic crackers at US refineries come
back on line which could signal the close of the arbitrage.
On Thursday, the May front-month unleaded contract rose over 5 cents to
$1.9471 and is up a further 3.5 cents on Thursday at 1152 London time (1052
GMT).
"Other than gasoline supply to the US, a rapid resolution of geopolitical
problems in Iran and Nigeria could dampen the market," a broker said.
Nigerian industry sources Thursday welcomed the outcome of a meeting with
president Olusegun Obasanjo and Niger Delta leaders but were skeptical as to
whether it was enough to persuade oil companies to return to abandoned fields.
Obasanjo agreed Wednesday to set up a new committee to bring an end to
the violent unrest in the Niger Delta that has seen the country's oil
production cut by over 20%.
The president said a panel would be inaugurated April 18 and made up of
representatives from the nine oil-producing states, Niger Delta Development
Commission, oil companies, ministries of oil, works, power and steel and
state-owned NNPC.
"The Niger Delta needs special attention by all of us. It is not a
Federal Government attention alone, not a state nor local government thing
alone. It is a community, family, individual, oil companies, development
partners and donors' thing," Obasanjo said, quoted in Thursday's ThisDay
newspaper.
A spokesman for the Delta state government said he did not expect Shell,
who has been the main target of a series of militant attacks, to resume
production any time soon.
--Jonathan Davies, jonathan_davies@platts.com

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