IPE Brent takes a breather after smashing through $78/barrel

IPE Brent takes a breather after smashing through $78/barrel

London (Platts)--14Jul2006

IPE Brent futures took a breather in London trade Thursday after pushing
above $78/barrel earlier in the day in Asia as Israeli jets continued their
assault on Lebanese targets and with new attacks on oil installations in
Nigeria adding additional fundamental support.
At 1138 London time (1038GMT) the August Brent futures contract, due to
expire later in the day, was changing hands at $77.26/barrel, up 57 cents,
from the all-time high settle of $76.69/barrel. Earlier, the August contract
opened in early electronic trading $1.07/barrel higher at $77.76/barrel and
then peaked at $78.03/barrel before withdrawing to a more steady level in the
low to mid-$77/barrel mark.
"Yesterday was such an important day and has determined how the market is
going to go in the next couple of months. The all time high settle showed that
the Brent market is very bullish, and today's open was even more bullish," a
London broker said.
Israeli forces, meanwhile, continued to bombard Hezbollah targets and
infrastructure in Lebanon. Previous strikes against Beirut airport have been
against runways and fuel tanks but AFP reported that Israeli forces had now
bombarded the terminal.
In Nigeria, suspected Ijaw militants killed four Nigerian Navy personnel
and injured three other soldiers near the oil city of Warri on Wednesday,
Nigerian newspapers reported Friday. The men attacked were escorting vessels
delivering supplies to Chevron oil producing platforms in the creeks of the
Niger Delta. The incident followed an arson attack Wednesday on an Eni oil
pipeline feeding the Brass crude export terminal in the southern Bayelsa
State. The Italian company said Thursday that Brass output had not been
affected by the incident.
Tensions between the West and Iran over the latter's nuclear programme
also continued to provide background support, traders said. On Thursday the
UN Security Council published the package of political and trade incentives
that have been offered to Iran if it suspends its uranium enrichment
activities.
The fundamental factors have shaped global markets considerably, a trader
said. "If the Iranians weren't enriching uranium you could probably take $7
out of the price of crude. Take away the disruptions in Nigeria and you could
take another $5 out. Without them we're left with crude prices near $60 or
so," he said.
Brokers said they expected front-month Brent futures to settle around the
$78/barrel later Friday, even without any fresh news. "It could easily
go upwards and I wouldn't be surprised if we see $80/barrel if any more
bullish news comes through today," a broker said.
Market players noted that the WTI-Brent spread between the two
front-months is at near parity, due to a tighter Brent loading program. On
July 5 the August WTI contract was trading at a $1/barrel premium to Brent.
However, in early trading on Friday Brent traded at a 10 cent premium to
WTI.
"The Brent loading program for August is down with the field maintenance
that is occurring then. This may have a knock-on effect to September's
program," a broker said.

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