IPE Brent rangebound, consolidating positions, ahead of weekend

IPE Brent rangebound, consolidating positions, ahead of weekend

London (Platts)--21Jul2006

IPE Brent futures in London were rangebound Friday morning as market
players look to secure their positions ahead of the weekend, brokers said.
Despite violence continuing in the Middle East the flow of oil has not been
affected which has enabled the market to take a breather, brokers said.

At 1106 London time the September IPE Brent futures contract was changing
hands at $73.87/barrel, up 15 cents from Thursday's settle.

"Brent futures are oscillating around the unchanged level this morning,"
a London-based broker said.

"The market now realises that currently the flow of oil from the Middle
East region has not been affected and therefore oil prices are not being
driven by that. Oil prices though are still being driven by headlines coming
out of the area," the broker added.

On Friday, warplanes went into action over Lebanon again, on the 10th day
of a conflict that is costing more lives each day and creating a growing
humanitarian crisis. The attacks come despite UN Secretary General Kofi Annan
on Thursday demanding an immediate ceasefire, highlighting the human suffering
caused by the offensive which has left more than 330 dead in Lebanon and sent
hundreds of thousands fleeing their homes.

The comments from Kofi Annan seem to have gone unnoticed as the foreign
ministry spokesman Mark Regev told AFP that, "we want to get to the point that
Hezbollah is dismantled as a military force in keeping with resolution 1559
and that they can no longer initiate a new crisis."

"One of the conditions for a ceasefire is that Hezbollah no longer
receives arms supplies from Iran and Syria once it is enforced," he added.

He underscored that Israel's deadly offensive in Lebanon, launched on
July 12 after Hezbollah guerrillas captured two soldiers, did not prohibit
Israel from "starting to talk" to find a diplomatic solution to the crisis.

Despite the continued attacks, market players are now starting to think
that there is "more likelihood of peace in the long run," a broker said. US
Secretary of State Condoleezza Rice is also expected to visit the region as
early as next week.

A broker noted that refinery problems in the US have underpinned gasoline
prices and therefore propped up crude prices as well, especially during the
current high demand period that is the US driving season.

Yesterday, ConocoPhillips announced that it had shut the whole of its
322,000 b/d refinery in Wood River, Illinois, late Wednesday due to a
plant-wide power failure, a company spokesman confirmed.

"At approximately 7:30 pm Wednesday evening, ConocoPhilips' Wood River
refinery experienced a utilities outage due to severe storms which affected
much of the St. Louis metropolitan area," the spokesman said.

Also, Valero's 185,000 b/d St. Charles, Louisiana, refinery shut a fluid
catalytic cracker for 20 days of unplanned maintenance.

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