NYMEX crude to open 85 cents higher on strong US demand

New York (Platts)--2Jun2006

July crude futures on the New York Mercantile Exchange are called to
open 85 cents higher at $71.19/barrel Friday with strong petroleum demand
readings in Thursday's Energy Information Administration report underpinning
the rally. A renewed slide in the US dollar also helped push prices up across
the commodity complex.

"In a market worried about supply, bullish demand matters: the
counterpoint, that sooner or later oil prices will curb growth should be
validated - only later, not sooner, judging from US demand data," Jan Stuart,
energy analyst at UBS, said in a report.

Total product deliveries on a four-week moving average were 20.1 million
b/d, or 681,000 b/d above year-ago levels for a gain of 3.34%.

July unleaded gasoline is called to open 2.86 cents higher at $2.1558/gal
and July reformulated blendstock for oxygenated blending is called to open
2.87 cents higher at $2.3033/gal. July heating oil is called to open 3.24
cents higher at $2.0031/gal.

Crude and the product markets benefitted from another downturn in the US
dollar. The commodity complex has been sensitive to every fluctuation in the
US dollar as a weak greenback erodes the terms of trade for producers.

"In combination with a wider spread between light and heavy crude oil
streams, the impact on OPEC's effective purchasing power has been
substantial," Adam Sieminski, energy analyst at Deutsche Bank, said in a
report. "Although headline WTI prices have hovered near $70/barrel recently,
the OPEC market basket price, adjusted (using the Euro) for the decline in the
US dollar is closer to $50/barrel."

OPEC left production quotas unchanged at 28 million b/d at its meeting in
Caracas, Venezuela Thursday.

--Linda Rafield, linda_rafield@platts.com

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