Crude futures fall farther as hedge funds continue to sell

Crude futures fall farther as hedge funds continue to sell

London (Platts)--17Nov2006

Global crude futures continued Thursday's sharp sell-off on Friday as
hedge funds continued to sell, with prices being driven down with the NYMEX
front-month WTI expiry and bearish natural gas stocks, brokers said.
At 1156 GMT January ICE Brent was changing hands at $58.19/barrel, down
35 cents. Across the Atlantic Ocean, December NYMEX WTI was extending the
front-month yearly low and was trading at $55.40/barrel, down 86 cents.
January WTI on ICE was pegged at $58.16/barrel, down 34 cents.
Late Thursday, a build in US natural gas stocks as well as the impending
December NYMEX WTI futures expiry pushed prices lower.
As prices for December WTI fell through the $58.50 level, fund selling
stops kicked in, pushing prices significantly lower, brokers said.
"Funds are continuing to sell the futures again this morning. It was a
really big drop on Thursday and it will probably keep going although there
maybe a little dip buying here and there," a London-based broker said.
The front-month NYMEX WTI contract hit a yearly low Friday of
$55.30/barrel, the lowest level since June 2005.
Prices were pulled lower as the US Energy Information Administration
reported a 5 Bcf build in US gas stocks, in line with expectations.
This comes amid continuing mild weather in the US, although this is
forecast to change in the upcoming week, as well as healthy heating oil stocks
in both Europe and the US.
Bearish sentiment persisted in the market despite comments from OPEC
President Edmund Daukoru Thursday that the cartel will likely cut additional
production at its December 14 meeting, and five consecutive US petroleum
reports showed a significant tightening in products supply/demand balance.
"Stocks are higher than where they were when we met in Doha so I would
think we are set for a further cut in December," Daukoru said, referring to
OPEC's emergency meeting in Doha October 19-20, when the cartel decided to cut
production by 1.2 million b/d effective November 1.
ICE gasoil futures caught up with crude Friday, falling significantly.
The drop in prices is also due to mild weather in Europe, where temperatures
are expected to stay above average for the next week. At 1156 GMT the December
gasoil futures contract was trading at $521.00/mt, down $20/mt.
--Jean-Luc Amos, jean-luc_amos@platts.com

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