IPE Brent strengthens further as funds cover short positions

IPE Brent strengthens further as funds cover short positions

London (Platts)--7Jul2006

IPE Brent crude futures in London strengthened in morning trading on
Friday as short covering ahead of the weekend pushed August Brent upwards
having been rangebound for most of the day, brokers said.
At 1134 London time, the August IPE Brent futures contract was trading
55 cents above Thursday's settle at $74.63/barrel with the August/September
spread narrowing from around a dollar Thursday to around -70 cents.
"It's was quiet this morning as the market finishes looking at the US
stats and looks ahead to the weekend. There's no real news or speculative
activity and I think the rally is due to people covering short positions over
the weekend," a London-based broker said.
On Thursday, the US Energy Information Administration reported further
bearish gasoline stocks data, against expectations of a 630,000 barrel
decline. The EIA reported a 700,000 barrel jump in gasoline stocks whilst the
American Petroleum Institute showed a 796,000 barrel drop.
"Gasoline looks bearish and has led the complex lower, but there could be
a recovery as the figures are digested," Calyon head of energy market research
Mike Wittner wrote in a report.
The bearish gasoline data initially counteracted the larger than expected
declines in crude stocks. the EIA reported a 2.4 million barrel decline in
inventories, higher than the 1.9 million barrel decline
analysts had projected, but slightly less than the 2.6 million-barrel fall
reported by API.
Late in Thursday's session, after the release of the US crude and
products data, crude futures rallied through the $74/barrel mark, rising
around a dollar, however some market players did not see the reason for it.
"The rally last night did not seem to be justified," a trader said.
As Brent futures prices have risen over the past 4 weeks by around
$7/barrel, or just over 10%, open interest has increased significantly as
players increase their long positions, traders said. Since June 20 open
interest has increased by 67,715 to 474,022 on July 6.
"We're seeing a general increase which keeps the market healthy and also
a lot of smaller outfits are entering into the markets," a broker said.
In other news, talks in Brussels about the nuclear standoff between Iran
and the West have made a "good start", between EU foreign policy chief Javier
Solana and Iran's top nuclear negotiator, Solana's spokeswoman said Friday.
"We have laid the ground for the meeting on the 11th (July), which we are
hoping will be positive," Solana's spokeswoman Cristina Gallach added.
Solana and Iranian negotiator Ali Larijani held talks late Thursday to
see whether the Islamic republic might be prepared to discuss an offer of
political and economic incentives in exchange for suspending uranium
enrichment.

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!!.