IPE Brent crude oil climbs after digesting US stock data

London (Platts)--29Jun2006

IPE Brent crude oil futures in London continued to firm steadily Thursday
as the market digested the US inventory data which came out Wednesday, sources
said.
At 1038 London time (0938 GMT) the August Brent futures contract was
changing hands at $71.80/barrel, up 38 cents from the overnight settle amid
light trading, and the contract was trading in the $71.70 to $71.80 range for
most of the morning, sources said.
In early electronic trading the August contract traded at $71.89/barrel,
the highest level since June 5.
"Despite the price edging upwards there is actually very little movement
in the flat price. The moves have mainly been due to a tightening of the
August-September inter-month spread, where early this morning it was around
minus 50 cents/barrel but has come in to minus 40 cents/barrel or so," one
London-based broker said.
There is no fundamental reason for the tightening of the spreads,
traders said, but some market players noted that the US crude and product
stock data released by the American Petroleum Institute and Energy Information
Administration was acted upon further after an initial period of reflection.
"The stats did not have a big effect initially but the market took its
time to take in the information before making a decision. We're seeing some of
that this morning," one trader said.
On Wednesday, the EIA reported a fall in US commercial crude stocks of
3.4 million barrels, more than the projected 1.4 million barrels. The API
showed a decline of 1.5 million barrels.
Calyon analyst Mike Wittner noted in a report that despite the larger
than expected crude draw, "crude stocks remain very high at almost 344 million
barrels--near tank-tops. In addition, much of the inventory decline (3.1
million barrels) was accounted for by the 448,000 b/d decrease in crude
imports. The import figures are very volatile on a week-to-week basis, so not
too much should be read into a one-week drop."
In Moscow, foreign ministers from the G8 are meeting Thursday to discuss
potential ways of convincing Iran to react to proposals aimed at defusing the
crisis over the nation's nuclear program.
--Jean-Luc Amos, jean-luc_amos@platts.com

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