Brent below $60 for first time in 6 months on Prudhoe Bay, Iran

London (Platts)--25Sep2006

Front-month ICE Brent futures in London fell through the support level of
$60/barrel Monday for the first time in over six months as new Prudhoe Bay
developments and EU-Iran talks pushed prices lower, brokers said.
At 1031 GMT, the November ICE Brent futures contract traded at
$59.48/barrel, down 93 cents from Friday's close, breaking through the
$60/barrel mark for the first time since 09 March. The November WTI futures
contract on ICE was also significantly cheaper, trading at $59.77/barrel, down
78 cents.
"Bullish news is just non-existent. There's a few bits of bearish news
which have pushed prices down further, and once we broker through $60 there
was just another selling rout," a London-based broker said.
The November Brent contract has fallen to an intra-day low of
$59.32/barrel, very near the cited level of support at $59.25/barrel. Beyond
this level, market players see the next level of support around the
$58-58.50/barrel level.
"We've broken through the big psychological $60 level and now I think
it's just big round numbers, like $58 that people are seeing as levels of
support," a trader said. Brokers said, however, that there will be a little
bit of buying from day traders who will try to cash-in on the cheaper oil
price.

PRICE FALL ON PRUDHOE BAY PIPELINE, EU-IRAN TALKS
Market players highlighted the news out late on Friday that BP has been
allowed to restart and test one of two low-pressure pipelines in the eastern
operating area of the Alaska North Slope Prudhoe Bay Field shut since August
when severe corrosion was detected in the lines.
The US Department of Transportation and BP Friday said the federal
agency's approval means BP will be able to pump oil back into the 5-mile-long
Flow Station 1 line so it can be cleaned and tested and returned to service, a
BP spokesman told Platts. Initial flow will be about 150,000 b/d, with
throughput eventually to rise to the pipeline's 200,000 b/d capacity, he said.
EU-Iran talks have also helped the prices move lower.
EU foreign policy chief Javier Solana is scheduled to meet with Iranian
nuclear negotiator Ali Larijani for a series of negotiations this week, armed
with a stronger mandate from the major powers.
The talks are aimed at getting Iran to accept a package of economic and
diplomatic incentives--including the first direct diplomatic contacts with
the US in 27 years--in exchange for suspending a uranium enrichment program
that the West fears is aimed at producing nuclear arms.
European leaders have expressed renewed optimism the talks will succeed
after Iran's hardline president, Mahmoud Ahmadinejad, voiced a willingness to
suspend enrichment "under fair and just conditions" during appearances at the
General Assembly.

HEDGE FUNDS CONTINUE TO WITHDRAW FROM GLOBAL CRUDE MARKETS
Brokers on Monday noted how they have seen further funds withdrawing from
the market prompting prices to fall lower. Proof of this can be seen in the US
where the latest Commodity Futures Trading Commission report showed that
non-commercials, which are primarily comprised of hedge funds, sold 6,851
contracts of crude futures and options on the NYMEX as of the week ending
September 19.
Non-commercials were long just 15,808 contracts of crude futures and
options, the smallest long position since May 2005, according to the
Commitments of Traders report.

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