Crude futures fall as IEA reduces global oil demand
forecast
London (Platts)--10Nov2006
Global crude futures fell on Friday, retracting from strong gains in the
previous two days as as the latest International Energy Agency report showed a
reduction in projected global oil demand and an increase in non-OPEC supply.
At 1024 GMT the December Brent crude futures on ICE was changing hands at
$60.47/barrel, down 85 cents from Thursday's settle. Both December WTI crude
futures contracts on ICE and NYMEX were down 76 cents at $60.40/barrel.
"The IEA report has pushed prices down slightly as well as the market
trying once again to find its feet. Ultimately though, there isn't that much
happening as volumes are pretty low so far," a London-based broker said.
The Paris-based IEA, an advisor to major oil consuming countries in the
OECD, reduced its estimates of world oil demand this year to average 84.49
million b/d, down 80,000 b/d from a previous estimate of 84.57 million b/d, it
said in its latest monthly oil market report.
It has also cut its estimate of world oil demand for next year to 85.94
million b/d, also down 80,000 b/d from the previous monthly report's estimate
of 86.02 million b/d.
On the supply side, the IEA raised its forecast for non-OPEC supply to
52.7 million b/d in 2007, up 100,000 b/d from its previous report.
The net effect of the downward revision to demand next year and the
increase in the non-OPEC supply forecast is to reduce the 'call' on OPEC crude
and stocks in 2007 to 28.3 million b/d, 100,000 b/d less than previously seen.
During the past two trading sessions, global benchmark crude prices rose
around $2/barrel, primarily on the back of a larger than expected draw in US
distillate stocks.
However, market players said a resistance level of around $61.35/barrel
had failed to be broken through and prices were still trading in a range.
"We have a very strong base at $57 and if we were to break up through the
$62 to $62.50 resistance then prices could easily rise by $3 to $4," a trader
said.
Futures traders also cited the ICE gasoil futures expiry for November
delivery at 1200 GMT as a reason for the drop in prices.
"Despite volumes dropping considerably in the last few days as we near
expiry, the price still does concentrate the eye and it does still affect
crude prices," a broker said.
At 1024 GMT the November ICE gasoil futures contract was trading at
$537.25/mt, down $5.50/mt.
--Jean-Luc Amos, jean-luc_amos@platts.com
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