IPE Brent rallies on heightened tensions in Middle East

IPE Brent rallies on heightened tensions in Middle East

London (Platts)--13Jul2006

IPE Brent crude futures in London continued to surge higher breaking
fresh record highs on a series of factors including heightened tensions in
between Israel and Lebanon, the ongoing nuclear crisis in Iran and the latest
incident in Nigeria's oil producing region, brokers said.
The front-month August Brent futures contract was trading 99 cents higher
at $75.38/bbl slightly below the intra-day high of $75.60/bbl. "The market is
going towards $80/bbl and there has been no hurricane yet," a Man Financial
broker said. ICE WTI crude oil futures were also up sharply with the US light
sweet contract hitting a fresh all-time high of $75.88/bbl. At 0907GMT, the
August contract was trading 74 cents higher at $75.71/bbl.
A surge in prices began early on in Singapore in thin volumes, but the
pick up was expected to gather pace in the London trading day. "Any pull back
is going to be mopped up," Man Financial said in reference to a drop in
prices.
In the early hours of Thursday, Israel launched air strikes on its
neighbour Lebanon in retaliation for two soldiers being snatched by Hezbollah
guerrillas Wednesday. The fresh attacks are likely to heighten tensions in the
middle east region, a key supplier of oil to the west. Israeli Prime Minister
Ehud Olmert branded it as an "act of war."
The intermonth spreads were also significantly higher with the Aug/Sep
spread trading around -52 cents in contango, up over 30 cents from the July 6
level. The tightening of the spreads can also be attributed to the tighter
North Sea loading programmes for August, brokers noted.
Crude oil futures were boosted further by news of a ruptured oil pipeline
in Nigeria. The pipeline, owned by Italian Eni's Nigerian subsidiary Agip was
ruptured with suspisions pointing to sabotage. The pipeline delivers Brass
River for export, but the impact on exports was not yet known.
IRAN THREATENS TO REVISE NUCLEAR COOPERATION
Meanwhile, defiant comments by Iran's hardline President Mahmoud
Ahmadinejad early Thursday stoked more fears in the market.
Ahmadinejad threatened to "revise" his country's cooperation with
international authorities probing the country's nuclear program, in reaction
to world powers Wednesday agreed to send the Iran issue back to the Security
Council.
The president did say that Tehran was still considering international
demands to freeze sensitive nuclear work in exchange for incentives, but said
a reply would not be given before mid-August.
US STOCK DATA BULLISH
Oil prices were also supported by the latest round of US stock data which
showed crude inventories dropping a massive 6 million barrels on the back of
lower imports. More importantly, gasoline demand continued to edge higher on a
four week moving average notching up a 1.7% gain on the year. On a week on
week basis, demand actually fell 24,000 b/d, the US Department of Energy said.

NNPC SAYS EXPORTS UNAFFECTED BY BRASS SABOTAGE
In Nigeria, state-owned NNPC Thursday said exports from the Brass crude
oil terminal have not been affected after vandals burst pipelines taking crude
from fields in the western Niger Delta to the Agip-owned terminal.
Italian Eni's Nigerian subsidiary Agip late Wednesday said there was a
"massive" oil spill from the trunkline at Tedibaba feeding the terminal but it
could not confirm talk that the incident had resulted in the shut-in of
100,000 b/d of production.
Paul Wightman, paul_wightman@platts.com

For more news, request a free trial to Platts Forward Curve Oil at
http://www.platts.com/Request%20More%20Information/

Please visit: www.platts.com

Their coverage of energy matters is extensive!!.