Strong gasoline demand fuels rise in IPE Brent futures

London (Platts)--22Jun2006

IPE Brent crude futures in London rose sharply in trading on Thursday as
funds re-entered the market to take new long positions having realized that
they may have over-sold the market as it seeks to re-establish itself above
$70/barrel, range driven by strong gasoline demand, brokers said.
At 1052 London time (0952 GMT), IPE Brent crude for delivery in August
was up 73 cents trading at $69.90/barrel having already teased $70/barrel oil
at 0912 London time when it tipped an inter-day high of $70.01/barrel, a price
not seen since June 12.
On Wednesday, total open interest on Brent rose sharply to 431,380 lots,
having reached a 12 week low of 406,307 lots on Tuesday.
"Gasoline strength and demand for light sweet crude is providing support
to this rally which has extended yesterday's gains towards the end of the
day," a London-based broker said. "It seems to be holding support levels and
it looks like it will establish itself back above $70/barrel after sellers
realized they made a bit of a mistake and funds are now buying."
Crude futures ranged between $67.70/barrel and $68.39/barrel until 1530
London time when US energy data revealed strong gasoline demand, which pushed
up the price of August Brent to $69.17/barrel at the close, a gain on the day
of $1.09.
Gasoline demand was up 0.9% over the past four weeks compared with a year
ago at 9.41-million b/d, according to the Energy Information Agency. The build
in gasoline stocks was smaller than expected which offset builds in crude.
On Wednesday, gasoline responded by posting a gain of around 6 cents for
the day closing at $2.0660/gallon. NYMEX light sweet crude responded with a 99
cents rally closing at $70.33/barrel, and early Thursday was trading over half
a dollar higher at $70.95/barrel.
There was more fuel for the bulls on the geopolitical front with fresh
saber rattling from Iranian President Mahmoud Ahmadinejad who said Thursday
that Iran wanted to keep hold of its sensitive nuclear fuel cycle technology,
an indication that Tehran is unwilling to bow to international demands for a
suspension.
"The nuclear fuel cycle belongs to all Iranians and everyone has a right
to use it. All people insist on maintaining this right," he was quoted as
saying in a speech in Hamedan province.
The world community has called on Iran to respond to a package of
incentives offered by five permanent Security Council members plus Germany in
exchange for the suspension of Tehran's controversial nuclear enrichment
program.
Iran insists its nuclear program is a peaceful effort to produce energy,
but the US and its allies suspect the program is a cover for the development
of atomic weapons.

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