Crude pauses for direction after long weekend

Crude pauses for direction after long weekend

Singapore (Platts)--30May2006

Benchmark July crude futures on the New York Mercantile Exchange
consolidated in a narrow range around Friday's $71.37/barrel close Tuesday
afternoon in Asia after touching a high of $71.75 early in early Access
trading, as players awaited cues on direction after a three-day weekend.
Front-month light sweet NYMEX crude was last traded at $71.38/barrel at
848 GMT, up a cent. Across the Atlantic, IPE July Brent crude changed hands at
$70.58 at 889 GMT, down a cent. Both exchanges were closed for the respective
US and UK public holidays Monday.
OPEC ministers gathering in the Venezuelan capital Caracas for a meeting
Thursday to decide on third-quarter output policy were widely expected to
leave their 28 million b/d ceiling unchanged. The group pumped 30.01 million
b/d in April, the highest since November 2005, according to a Platts survey.
Kuwaiti oil minister Sheikh Ahmed Fahed al-Sabah Monday lent support to
the idea of the cartel maintaining status quo. "Kuwait would like to continue
with the same production level just to show the market that the security of
supply will continue and try to bring the prices to a more stable level,"
Sheikh Ahmed said.
His UAE counterpart Mohammad Dhaen al-Hamli said OPEC would maintain its
current production levels, even though there was no shortage of crude oil in
the market, because oil prices remained high, the country's official WAM news
agency said.

PRICES SEEN HIGH, DEMAND STABLE THROUGH 2006
Hamli said crude prices were expected to remain high this year and that
demand for crude oil through the rest of 2006 would continue at the same rate
as 2005. A fair price for the OPEC crude basket -- suitable to producers and
consumers -- would range between $50-60/barrel, the minister said.
Venezuelan oil minister Rafael Ramirez is the only OPEC minister so far
to have mooted that the producers' club reduce output. "Market fundamentals
indicate that there should be a cut in production," Ramirez told a press
conference in Caracas May 22. "There is more than enough oil in the market."
Bullish factors still outweigh bearish signals in the oil market, with
geopolitics still at the center stage. Nigeria's Niger Delta strife is still
festering and no resolution is in sight to the row over Iran's nuclear plans.
Coinciding with OPEC's meeting Thursday, the five permanent members of
the UN Security Council plus Germany are to meet in Vienna to discuss Iran's
nuclear program, AFP quoted a Chinese foreign ministry spokesman as saying
Tuesday. Tehran, for its part, is sticking to its refusal to halt sensitive
uranium enrichment work.
The country would study European proposals to end the crisis, the foreign
ministry in Tehran said Tuesday, but added none had been received so far.

IRAN RESOLUTE ON URANIUM ENRICHMENT
Foreign ministry spokesman Hamid Reza Asefi repeated that a freeze in
fuel cycle work was "not on the agenda", according to AFP reports.
Meanwhile, worries over gasoline supplies in the US this summer driving
season as the country phases out MTBE as well as forecasts calling for another
active North Atlantic hurricane season this year also leave the OPEC ministers
with little maneuvering room.
The US Gulf hurricane season begins Thursday, with 22% of the region's
crude and 13% of natural gas production still offline following last year's
devastating hurricanes Katrina and Rita.
The US Commerce Department's National Oceanic and Atmospheric
Administrations last Monday predicted a "very active" hurricane season for the
North Atlantic, with 13 to 16 named storms, eight to 10 of which will be
hurricanes and four to six of those will be intense.

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