Crude futures higher on talks of increased Chinese crude imports

London (Platts)--5Dec2006

Global crude futures recovered from losses made on Monday as support for
front-month Brent was found around the $63.15/barrel level as well as reports
that China has bolstered its strategic oil reserve, broker said.
At 1140 GMT the January ICE Brent futures contract changed hands at
$64.04/barrel, up 59 cents from the overnight settle. The ICE WTI and NYMEX
WTI contracts for January were both up by 58 cents at $63.02/barrel.
"After yesterday's we've hit some support at the $63.15/barrel level (for
January Brent futures) and talk of China increasing it oil reserves has
definitely been taken seriously," a London-based broker said.
The broker added that there are reports that through November China has
imported 8.2 million barrels of crude oil. This figure is larger than expected
and has pushed prices upwards, they added.
Market players said that China took advantage of lower crude prices to
fill some of their strategic storage tanks. Since late September front-month
crude futures traded within a $58-62/barrel range, prices not seen since late
March 2006.
On Monday, despite low volumes, crude prices fell significantly after a
week of crude traders taking advantage of the weak US dollar, an expected cold
snap in the US northeast, which pushed crude prices up by over $4/barrel.
Prices fell Monday as the US dollar consolidated and a milder weather outlook
also pressured natural gas and heating oil prices, dragging down the rest of
the energy complex.
Front-month ICE Brent futures fell to near $63.15/barrel, a level of
resistance cited by crude players. This level has been tested once again early
Tuesday but once it failed to be broken traders decided to "buy the dip,"
according to a broker.
Product prices were also higher Tuesday. The December ICE gasoil futures
contract was up by $5.75/mt to $559/mt. January NYMEX heating oil futures
traded at $1.827/gallon, up 1.81 cents. The NYMEX RBOB contract has also been
pulled up by 1.89 cents to $1.682/gallon.
--Jean-Luc Amos, jean-luc_amos@platts.com

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