ICE Brent futures back above $70/barrel on expected crude draw

ICE Brent futures back above $70/barrel on expected crude draw

London (Platts)--30Aug2006

ICE Brent futures in London rose over half a dollar on Wednesday in
anticipation of a draw in crude stocks in the US later in the day and a slight
fall in gasoline stocks, brokers said.
However, despite the strengthening of Brent futures this morning, there
is a feeling in the broking community that perhaps the bull run is over.
Hurricane fear is receding as Ernesto drifts up the US east coast. Iran
is to hold talks in Russia next week to discuss a proposal over its
controversial uranium enrichment program. In Nigeria, the state security
service arrested 15 persons suspected of terrorizing the Niger Delta region
following President Olusegun Obasanjo's directive to hunt down militants
responsible for a spate of kidnappings.
"There is a feeling that perhaps this market has run out of steam which
has overseen this steady fall in Brent as bullish news hits the headlines,"
said a London-based broker. "But when October went below $70/barrel it didn't
like it at this level and now it has shot back up. Throughout this fall we
have seen very little fund liquidation, which we expected below $70/barrel,
and funds rolling their positions has been a feature instead."
At 1028 London time (0928 GMT), October Brent traded 51 cents higher
at $70.31/barrel from Tuesday's settle of $69.86/barrel. Brent spreads
weakened again on Tuesday, particularly Oct/Nov while brokers have noted
that gasoil spreads remain strong.
"There has been a lot of end user demand for gasoil particularly from
Switzerland and Germany as they fill tanks early ahead of the winter and we
could be starting to see gasoil become the driver for the energy complex,"
said one broker.
The hurricane premium on the crude complex has been neutered as it drifts
away from the oil producing areas off the coast of Louisiana and Texas. The US
National Hurricane Center late Tuesday discontinued its hurricane watch for
southern Florida as Tropical Storm Ernesto was "not strengthening." But
the hurricane watch remained in effect along the storm's projected northerly
path for the coasts of Georgia and North Carolina.

US INVENTORY DATA EXPECTED TO SHOW A CRUDE DRAW
US oil inventory data due to be released Wednesday by the US Energy
Information Administration and American Petroleum Institute are expected to
show a 1.3 million barrel barrel draw in commercial crude stocks, analysts
surveyed by Platts said Tuesday.
The ongoing partial loss of BP's Prudhoe Bay field will continue to
affect inventories along the West Coast with the assumption being that imports
held steady at 10.197 million b/d while refinery utilization is expected to
edge higher.
Analysts were projecting an increase of 0.3% in refinery utilization to
93.05%, based on last week's EIA data.
Consensus estimates were projecting a draw in gasoline inventories of
650,000 barrels. Distributor stocking ahead of the Labor Day weekend would be
in line with seasonal norms, but a jump in production will likely be offset by
an increase in demand.
Analysts were projecting a build in distillates of 850,000 barrels.

IRAN NUCLEAR CHIEF TO VISIT RUSSIA
The head of Iran's atomic energy organisation will hold talks in Moscow
next week on a nuclear offer from world powers and the completion of Iran's
first nuclear reactor, the semi-official Mehr agency reported on Wednesday,
reports the AFP.
"Next week I will head a delegation going to Moscow to discuss the offer
of the 5+1 countries with Russian officials," Gholamreza Aghazadeh told the
agency, referring to a proposed deal over Tehran's nuclear program from the
five permanent UN Security Council members and Germany.
The International Atomic Energy Agency, UN's nuclear watchdog, is
expected Thursday to confirm that Iran has failed to suspend strategic nuclear
fuel work, opening the door to possible UN sanctions against Tehran, AFP
reported.
Iran has made clear that it intends to pursue uranium enrichment, which
it began earlier this year. Enrichment makes fuel for nuclear power reactors
but can also produce the raw material for atom bombs.
--Jonathan Davies, jonathan_davies@platts.com

For more news, request a free trial to Platts Forwward Curve Oil at
http://www.platts.com/Request%20More%20Information/

Please visit: www.platts.com

Their coverage of energy matters is extensive!!.