IPE August gasoil contract settles at all-time high $659.75/mt

IPE August gasoil contract settles at all-time high $659.75/mt

New York (Platts)--13Jul2006

NYMEX front-month light, sweet crude futures settled at an all-time high
of $76.70/barrel Thursday, a gain of $1.75, while front-month IPE Brent
settled $2.30 higher at a record high $76.69/barrel as violence between Israel
and Hezbollah guerillas operating from Lebanon escalated ahead of Friday's
Brent expiration.

Trade and fund buying left the light, sweet crude market with a selling
vacuum. Trade bought early in the Thursday session, presumably lifting short
hedges as prices raced higher and funds bought at least 4,000 September
contracts.

The buying in the September contract caused the front of the futures
curve to collapse as those who sold the contract had to buy the front spread
to cover their position. August/September settled Thursday at minus $1.54
after settling the previous session at minus $1.11. While the weakening in the
front of the crude curve was associated more with buying in the flat price
market rather than any shift in fundamentals, the steepening contango would
encourage additional storing of barrels at the delivery point in Cushing,
Oklahoma.

Cushing inventories were 25.003 million barrels for the week ending July
7, according to the most recent data from the Energy Information
Administration, just 297,000 barrels below the all-time high posted March 24,
2006.

Total spread volume traded was more than 200,000 contracts, according to
sources at Man Financial.

August NYMEX heating oil settled 6.15 cents higher at $2.0799/gal and
August IPE gasoil settled $23.50/mt higher at an all-time high of $659.75/mt.
August NYMEX unleaded gasoline settled 4.54 cents higher at $2.3013/gal and
August reformulated blendstock for oxygenated blending settled 1.81 cents
higher at $2.3856/gal.

"In view of current strong upward momentum, a further rally appears
likely tomorrow ahead of a weekend that could bring fresh bullish news on
several geographical fronts," energy consultant Jim Ritterbusch said in a
report.

--Linda Rafield, linda_rafield@platts.com

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