IPE Brent futures rebound on Iranian threats, Israeli warnings

IPE Brent futures rebound on Iranian threats, Israeli warnings

London (Platts)--20Jul2006

IPE Brent futures firmed early Thursday following Wednesday's sharp
sell-off with funds returning to the market after Tehran announced it would
continue its controversial uranium enrichment work and warned the UN Security
Council against choosing a "path of confrontation", brokers said.
Also causing a few jitters in the market was a statement from Israel's
army chief Dan Halutz on Thursday, who warned that Israel's offensive in
Lebanon and the Palestinian territories "could last a long time".
At 1149 London time (1049 GMT), September Brent was trading 38 cents
higher at $74.28/barrel while September ICE WTI contract was trading 18 cents
higher at $74.95/barrel. The August WTI contract expired yesterday at
$72.66/barrel.
"There has been a healthy level of volume this morning with 21,000 lots
traded on front-month Brent and it seems the more volatile the market the
higher the volume goes," said one London-based broker.
ICE open interest in Brent remains high, reaching 460,832 on Wednesday.
"Yesterday was obviously a sell-off with a fair amount of profit taking
but I know plenty of hefty traders who are still relatively bullish keeping an
eye on what's happening in the Middle-East and mindful of the fact that
hurricane season is around the corner," he said.
"While this market isn't reacting as strongly to geopolitical drivers as
it was, the fundamentals are still in place to push it higher rather than see
the price drift away," he added.
Long positions, which have been saturating the market over the past three
three weeks were compelled to cash in on Wednesday, pushing September Brent
from a high of $75.13/barrel to a low of $72.59/barrel before a late rally
pushed the close to $73.90/barrel.
The US Energy Information Administration reported a 200,000 barrel build
in crude inventories. This is in contrast to expectations for a 225,000 barrel
draw and the 940,000 barrel decline reported by American Petroleum Institute.
The EIA also reported a 1.5 million barrel build in gasoline stocks in
contrast to analysts' projections for a 975,000 barrel drop, and higher than
the 1.3 million barrel increase reported by API.
--Jonathan Davies, jonathan_davies@platts.com

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