IPE Brent futures fall ahead of expected US crude stock draws

London (Platts)--21Jun2006

IPE Brent crude futures weakened slightly Wednesday amid quiet rangebound
trading ahead of the US inventory stock data due out later today.
At 1031 London time (0931 GMT) the August IPE Brent futures contract was
changing hands at $67.77/barrel, down 31 cents.
"There's little news directing the market so far today. People are
waiting for the US stock data to come out this afternoon for things to
change," a London-based broker said.
US crude inventory data to be released by the American Petroleum
Institute and Energy Information Administration at 1530 London time are
expected to show a 1.3 million barrel draw in commercial crude stocks,
according to analysts surveyed by Platts Tuesday.
An increase in refinery runs will is expected to deplete stocks further,
a continuation from the previous week. In last weeks data throughputs jumped
196,000 b/d to 15.83 million b/d, reducing crude stocks by 980,000 barrels.
"We are assuming refinery runs will move up to the 16 million b/d range
from 15.8 million b/d in the prior week," Katherine Spector, energy analyst at
J.P. Morgan, said in a report. "According to our analysis, roughly 400,000 b/d
of capacity returned from planned and unplanned maintenance in the reference
week."
On the products side, gasoline inventories are expected to build by
1.25-million barrels and distillate stocks, according to analysts polled by
Platts, should rise by 1.5-million barrels.
Elsewhere on the Intercontinental Exchange, front-month IPE gasoil
futures hit a two month low as market players suggested a weakening of the
intermonth spread as a factor.
At 1043 London time the July IPE gasoil futures contract was pegged at
$606.25/mt, down $7.25/mt, from Tuesday's close. The contract had fallen as
low as $605.00/mt, a price not seen since April 10.
The July-August intermonth spread closed on Tuesday at $5.25/mt
contangoed but has been as wide as $6.25/mt earlier on Wednesday, as market
players have said that they have "heard rumours that Morgan Stanley have been
selling the spread," widening the contango.

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