NYMEX crude opens 39 cents lower, lacking reason to reverse up

New York (Platts)--5Sep2006

October crude futures on the New York Mercantile Exchange opened 39 cents
lower at $68.80/barrel Tuesday, lacking any fundamental reason to reverse back
to the upside.

"The petroleum and natural gas markets look like they will start the week
with more of the same--weak prices on a combination of comfortable inventories
and no imminent threats to supply," Tim Evans, energy analyst at CitiGroup,
said in a report.

A break of technical support has been the catalyst for continued long
liquidation across the complex. Non-commercials, which are primarily comprised
of hedge funds, liquidated a total of 15,216 contracts in crude, gasoline and
heating oil. However, non-commercials were still net long a total of 88,764
futures and options contracts in the three markets as of the week ending
August 29.

"As shown by the latest CFTC data, liquidation of large speculative long
positions in both crude oil and gasoline has been a major driver behind the
recent weakness in oil prices," Kevin Norrish, energy analyst at Barclays
Capital, said in a report. "Fundamentals remain supportive of prices in the
$70s area in our view, as continued robust demand growth, coupled with
consistently disappointing supply increases."

October unleaded gasoline opened 1.94 cents lower at $1.72/gal and
October RBOB opened 1.92 cents lower at $1.7650/gal. October heating oil
opened 24 points lower at $1.9650/gal.

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