ICE Brent futures continue to show strength on OPEC expectations

London (Platts)--28Sep2006

ICE Brent futures on Thursday extended Friday's mini bull-run as the
crude complex dismissed bearish US inventory data to focus on signs from OPEC
of any scaling back of production, brokers said.
At 1132 London time (1032 GMT) November Brent was trading 27 cents
pricing at $62.48/barrel with ICE WTI November trading 8 cents higher at
$63.04/mt.
OPEC president Edmund Daukoru Wednesday said he had already started
consultations with member countries as "something had to be done" follwing a
fall in crude prices to around $60/barrel.
"There is a view that we continue producing and let the stock draw-down
take care of the situation. But there is also a view that we need to do
something about the supply side, there is no doubt about it. When oil prices
go up, we act and when they go down, something has to be done," Daukoru said.
The oil exporters' group would "deal with it informally," though, Daukoru
said, ruling out the likelihood of an emergency meeting before the next
scheduled meeting in December.
Barclay's Capital's Kevin Norish said in a report that signs of a
recovery phase are underway and a long overdue bounce as the market adjusts to
existing without premiums attached to the price of crude that hurricane risk,
conflict in the Middle-East and buoyant gasoline prices had been providing.
However, he argues that crude needs to establish a bridgehead in the mid
sixties by the end of the week or risk another fall.
On Wednesday, November Brent was again extremely volatile trading higher
in the morning ahead of the release of the US inventory data before dropping
to an inter-day low immediately after the market digested the 2.6-million
barrel build in distillate stocks. It hit an inter-day low of $59.45/barrel,
13 cents away from the six and a half month low, before surging upwards in
late afternoon trading closing $2.09 higher at $62.21/barrel. Brent was
dragged upwards by big gains in NYMEX WTI which rose $1.95 on the day, and
October heating oil which leapt well over 5 cents and unleaded, which also
jumped nearly 5 cents.

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