IPE Brent futures continue to plunge after US data, Iran news

London (Platts)--17Aug2006

IPE Brent futures continue to spiral downwards breaking through multiple
support levels on Thursday amid sings of ample crude stocks in the US and
production in Nigeria and the North Sea improving, brokers said.
News on Wednesday that Iran is ready to discuss suspending its uranium
enrichment activities in the face of potential UN sanctions and the ceasefire
in the Middle East has also added to the downward pressure on the market.
New forward month October Brent is steadily creeping nearer to the
$70/barrel market, a price not seen for nearly two months and a significant
figure.
"So far we haven't seen any fund liquidations but there is a temptation
to think that is crude drops below $70/barrel then this will be a feature of
this market," a broker said.
At 1106 London time 1006 GMT October Brent was trading at $71.72/barrel,
$1.11 down from the overnight settle of $72.83/barrel. With the expiry of
September the crude complex is once again trading in contango with a 79 cents
spread between October and November, slightly stronger from Wednesday. Over
the past eight days October Brent has given up nearly $7 in value from a high
of $78.46/barrel on August 08 to an inter-day low on Thursday of
$71.52/barrel. The September IPE Brent contract expired 72 cents/barrel weaker
at $73.08/barrel on Wednesday.
"There is more support on the down side of this market but you have to
remember that any sign of gasoline problems in the US, a negative outcome in
the talks over the Iranian nuclear programe later this month or a sniff of a
tropical depression and it could rise as quickly as it fell," he added.
September ICE WTI is trading $1.03 lower at the same time priced at
$70.86/barrel which expires on August 21. On Wednesday, ICE WTI volume neared
the 150,000 market with 147.826 lots traded in the day.

IRAN URANIUM ENRICHMENT
Iran is ready to discuss suspending its uranium enrichment activities,
foreign minister Manouchehr Mottaki said Wednesday as the August 31 deadline
loomed for Tehran to comply with a United Nations resolution calling on it to
freeze all enrichment work or face sanctions.
"Iran is willing to discuss the issue of suspension of our nuclear
activities with the European states," Mottaki said, quoted by official news
agency IRNA. "Even their demand for suspension of nuclear activities, which we
regard as illegal, can be discussed," he added.
Iran has said it will respond August 22 to a package of incentives
offered by the five permanent members of the UN Security Council--Britain,
China, France, Russia and the US--and Germany in return for an enrichment
freeze.
The foreign minister's remarks contrasted with those of the country's
hardline president Mahmoud Ahmadinejad a day earlier rejecting the UN
resolution. "If they think they can use a resolution as a stick against us,
they should know that Iranian people do not bend to language of force,"
Ahmadinejad was quoted as saying by French news agency AFP Tuesday.
--Jonathan Davies, jonathan_davies@platts.com

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