ICE Brent futures fall, shrugging off OPEC move to cut output

London (Platts)--29Sep2006

ICE Brent futures in London fell Friday as the previous day's news of
crude output cuts by some OPEC countries failed to support the market.
November ICE Brent crude was trading at $62.06/barrel at 0955 GMT, down
48 cents from the overnight settle. ICE WTI futures for the same month were
pegged at $62.44/barrel, down 32 cents.
Prices surged late Thursday as Nigeria said it was reducing crude
exports by 5%, and the OPEC secretary-general said Saudi Arabia was also
cutting production.
However, the rally proved short-lived as traders were seemingly skeptical
about OPEC's intentions and the possible impact on the market.
"Friday has started very quietly with little news to change prices much.
News about OPEC potentially cutting supplies seems to be the only thing
happening at the moment but I'm not sure how serious it will turn out to be,"
said one London-based broker.
Nigeria, whose top oil officials currently occupy the posts of both OPEC
president and secretary-general, appeared to be forging the way, with its
state oil company NNPC saying it was cutting crude exports by 5% from October
1, representing a reduction of 120,000 b/d.
"It's an understanding to moderate the supply in line with the demand,"
OPEC secretary-general Mohammed Barkindo said of the cartel's moves. "There is
not a deal as such. They are going to do it on a voluntary basis first to see
how the market reacts before they can decide anything."
Barkindo had said a day earlier that OPEC president Edmund Daukoru, who
is also Nigeria's oil minister, had begun consultations with other cartel
member countries.
Crude brokers also noted the recent correlation between oil and gold
prices, and suggested that support for gold at $600/oz could lead to knock-on
support for oil prices.
On Friday, gold reached a morning fix at 0930 GMT at $601.75/oz, when
November ICE Brent was at $62.22/barrel, on the London Bullion Market, down
slightly from Thursday's 1400 GMT fix at $603.00/oz, when November Brent was
$62.40/barrel.
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