Brent crude futures rise on continued supply uncertainty

London (Platts)--2Mar2006

Crude futures in London continued to rally, extending gains from the
previous two sessions on continued supply uncertainty in Nigeria and the
Middle East, traders said. 
     "The gains come despite a bearish to neutral US stocks report, " one
broker at Refco said. By 1054 London time, the front-month April Brent futures
contract was trading 67 cents higher at $63.12/barrel, just off the intra-day
high so far of $63.28/barrel. 
     Oil prices in London have risen nearly 4% since Tuesday. Brokers said
that $62/barrel was a key support level for WTI and resistance levels were
said to be around $63.25/barrel and $63.75/barrel for the Brent futures
contract. 
     Futures broker Mint said that if Brent broke through the $63.75/barrel
level, prices could easily rally another $1/barrel.  
     Earlier in the day, Jordanian officials said that they had foiled a bomb
plot against a key civilian target from the terrorist group Al-Qaeda. Attacks
against oil tankers have also been threatened according to the organization's
website. 
     "All of this uncertainty has certainly boosted prices," Refco said. 
     The situation in Nigeria was still uncertain despite assurances of
production being restored with Shell's current output being reduced by 20%
(500,000 b/d).
     The US Department of Energy, on Wednesday, said that crude oil stocks
rose 1.6 million barrels, but the largest build was seen on the dislocated US
west coast at 1.1-mil barrels. Refinery utilization fell a surprising 1.4%
against a projection of 0.2% as US refinery units went into maintenance. 
     Gasoline stocks rose a meager 300,000 barrels while distillate
inventories fell by 1.5 million barrels and heating oil by 2.1 million
barrels. Interestingly, the biggest falls were in the US northeast, the
world's largest consuming region for heating oil. 
     
     OPEC LIKELY TO ROLLOVER
     OPEC ministers meet in Vienna next week and some analysts are already
suggesting that the cartel could adopt a "watching brief" and leave output
unchanged. 
     "The value of the OPEC basket is high enough as to suggest that,with
reservations, OPEC will prefer a watching brief for the moment," Barclays
Capital said in their 1 March report. The market is still aware of a drop in
oil demand in the second quarter. Barclays Capital suggest that oil demand
will fall 2.1-mil b/d in the second quarter.

	--Paul Wightman, paul_wightman@platts.com
	--Jonathan Davies, jonathan_davies@platts.com

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