IPE Brent futures forced lower by profit taking ahead of US data

IPE Brent futures forced lower by profit taking ahead of US data

London (Platts)--6Jul2006

IPE Brent crude futures in London slipped in morning trading on Thursday
with funds taking advantage of a two-month high on the August contract with
some ligh volume profit taking, brokers said.
"Trading this morning was thin but the volumes have been steadily growing
and we've seen the spreads weakening," said one London-based broker. However,
August/September spread remains wide at around a dollar having started the
week at a little over 60 cents. "A number of spreads have been caught long and
this has been adding to the movement recently," said a broker.
August Brent gained nearly a dollar in late trading on Wednesday between
1700 and 1800 London time as concern over North Korea's missile tests
supported values. Expectations for another draw in US crude stocks and gaoline
stocks in the Energy Information Agency and American Petroleum Institute oil
inventory reports due out Thursday has also led the rally.
At 1125 London time (1025 GMT), August Brent was trading 33 cents lower
at 73.65/barrel. This is $1.32 cents away from the Brent all-time high seen on
May 3 this year. The inter-day high of August Brent is $74.22/barrel and a low
of $73.61/barrel.
"Analysts are expecting a draw in gasoline today but there is a feeling
that it could be larger," a broker said. If this is the case then the all time
high on Brent could be tested. "The North Korean missile tests are also adding
to concerns in the market which will always happen when missiles are flying
around and sanctions are being threatened," he added.
US oil inventory data due to be released Thursday by the US Energy
Information Administration and American Petroleum Institute is expected to
show a 1.9 million barrel draw in commercial crude stocks, according to
analysts surveyed by Platts Wednesday.
The closing of the Calcasieu Ship
Channel, preventing deliveries to three refineries in the Lake Charles region
was expected to cause a decline in US commercial crude inventories. Both
ConocoPhillips' 239,000 b/d Westlake and Citgo's 425,000 b/d Lake Charles
refineries borrowed crude from the US Strategic Petroleum Reserve to make up
for the lack of deliveries. However, Deborah White, energy analyst at Societe
Generale, was looking for a draw in crude as part of a seasonal pattern.
"Stockdraws are seasonally normal for crude and gasoline, and that's the
trend I now expect to continue through the end of August," said White.
Analysts were expecting a draw of 630,000 barrels in gasoline inventories
and a build of 1.7 million barrels in distillate stocks. Refinery utilization
is expected to decline 0.25% due to run cuts at the three refineries in the
Lake Charles area affected by the closing of the Calcasieu Ship Channel as
well as problems at Sunoco's Philadelphia and Eagle Point refineries, which
will affect the Atlantic Coast data.
--Jonathan Davies, jonathan _davies@platts.com

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