Crude prices fall despite supporting factors

Crude prices fall despite supporting factors

London (Platts)--28Jul2006

World crude futures surrendered part of the previous day's gains on
Friday, although players did not expect a bigger fall in prices with a number
of factors seen as supporting prices.
At 1101 GMT the September IPE Brent futures contract in London was
changing hands at $74.48/barrel, down 53 cents from Thursday's settle. At the
same time, September NYMEX crude was at $74.06/barrel, down 48 cents.
"We expect today's session to go out on a firmer note as Israel's
bombardment of south Lebanon, while no longer a cause for an upside panic,
will nevertheless keep the markets nervous going into the weekend," Edward
Meir said in a report.
Also on Friday, the September-October IPE Brent spread slipped back into
contango, after being over 20 cents backwardated in early electronic trading.
The move into backwardation followed several months of uninterrupted contango,
with traders saying the change was brought about by planned maintenance on the
North Sea Forties system and output disruptions in Nigeria.
Planned maintenance at fields in the Forties system is expected to reduce
output to 293,548 b/d in August, compared with 456,452 b/d in July.
In Nigeria, Royal Dutch Shell said Thursday that 180,000 b/d of Bonny
Light crude oil production, shut in since Monday, could resume in a couple of
weeks. Shell declared force majeure on Bonny liftings on Wednesday.
The company also said on Thursday that it did not expect a "significant"
recovery in Nigerian Forcados and EA production, shut since February, before
the end of the year.
Early Friday Israel was poised to intensify its offensive against
Lebanon, calling up thousands more reservists after claiming it had won the
green light from the world to crush Hezbollah.
But as warplanes continued to pound targets across Lebanon and battles
raged for a key border town, Israel said it would limit ground offensives
after nine soldiers were killed Thursday in the heaviest losses in 16 days of
warfare.
"Yesterday in Rome we in effect obtained the authorization to continue
our operations until Hezbollah is no longer present in southern Lebanon,"
Israeli Justice Minister Haim Ramon said, referring to a 15-nation conference
in the Italian capital that failed to agree on a ceasefire call.
--Jean-Luc Amos, jean-luc_amos@platts.com

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