IPE Brent futures extend earlier losses on US stock data

London (Platts)--18May2006

IPE Brent futures in London slipped further in early Thursday trading as
continued concern over gasoline demand and a build in gasoline stocks in the
US weighs heavily on the market, brokers said.
US gasoline demand in April was off 1.9%, or 173,000 b/d, according to
the American Petroleum Institute, due to the high prices recently seen
alongside all time high crude futures prices. However, demand has increased
into May and in the past four weeks, according to the EIA, demand has risen
0.2% from year ago levels.
On Thursday morning the slide began at 0845 London time dropping by 77
cents to an inter-day low of $68.32/barrel before recovering slightly.
Front-month IPE Brent futures contract for July was changing hands at
$68.94/barrel at 1143 London time (1043 GMT), only 10 cents down from
Wednesday's close at $69.04/barrel. In the previous trading session, the July
contract plummeted by over a dollar settling just above $69/barrel after the
EIA reported only a 100,000 barrel decline in crude stocks, which was less
than the 1.8 million barrel drop analysts had projected. The EIA also reported
a 1.3 million barrel build in gasoline stocks, in line with analysts'
expectations.
As well as crude following weak products, sustained speculative
liquidation of positions by commercial funds is also pushing down the market.
News overnight that there could be a further rise in interest rates to combat
inflation fears renewed concerns that there could be a pull back from
speculative assets. "However, with a weak dollar you could also assume that in
Europe it makes oil look cheap," suggested one broker.
Other bearish elements in the market was news that Indonesia will propose
that OPEC raise oil production in order to bring oil prices down from current
high levels when ministers meet in Caracas June 1, Indonesian oil minister
Purnomo Yusgiantoro said Thursday.
"We want OPEC to lower the oil price. At least OPEC should roll over its
current production or increase its output if possible," Purnomo told reporters
when asked about Indonesia's position leading up to the Caracas meeting.
--Jonathan Davies, jonathan_davies@platts.com

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