London (Platts)--7Feb2006

IPE Brent futures in London moved lower Tuesday on bearish gasoline stock
data expectations on the US Department of Energy's weekly report, offsetting
concerns over Iranian threats to security in the Persian Gulf, through which
40% of the world's tradable crude is shipped. 
     At 1150 GMT, the March contract changed hands at $62.99/bbl, 34 cts lower
from Monday's close, reversing earlier gains of more than a dollar on Iranian
threats to Persian Gulf oil shipping. 
     "Bearish inventory data is causing some sell-off at the moment and we
might see further data speculations," one London-based broker said. "Overall
the market is relatively quiet."
     Early expectations for the US DOE data out on Wednesday pointed to a draw
of 2.3-mil bbl in crude oil, gasoline stocks to rise 4.5-mil bbl and
distillates to increase 1.7-mil bbl. 
     Crude runs are estimated in the US Gulf to rise 130,000 b/d to 14.9-mil
b/d with some refineries returning after some unplanned outages, though the
runs are not expected to fully return to normal until May with the spring
maintenance scheduled to be heavy. 
     This offset concerns about Iran. Tehran has said it would resume uranium
enrichment and stop spot UN checks on its atomic sites in response to the
International Atomic Energy Agency's referral of Iran to the UN Security
Council. 
     Comments made by Soleiman Jafarzadeh of the Majlis National Security and
Foreign Policy Committee in Iran had sent jitters through the market. 
     "Those countries that claim they can increase their oil production in
order to prevent a rise in the price of oil, in the event that the UN imposes
sanctions on Iran, should know that the Islamic Republic holds the key to
security in the Persian Gulf," he said in comments reported by Iran's
semi-official Mehr news service. 
     The US Energy Information Administration says the Gulf states ship 90% of
their combined crude exports, around 17.2-mil b/d in 2003, through the
600-mile Persian Gulf. 
     China said on Tuesday that there is still room to resolve the Iranian
nuclear standoff through negotiations without referring in the UN, and urged
countries to intensify efforts for a diplomatic compromise.
     According to data released Friday by the US Commodity Futures Trading
Commission, non-commercials, which are primarily comprised of hedge funds,
added 10,091 contracts of crude futures and options on the New York Mercantile
Exchange from Jan 31.
     Non-commercials have added 35,230 contracts since Dec 27, 2005, to their
largest net long position since April 12, 2005 helping to push crude prices up
$10/bbl since that date. Non-commercials shed some long positions in unleaded
gasoline and heating oil, liquidating 1,940 unleaded futures and options, and
4,015 heating oil.

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