Crude futures weaker ahead of expected US crude stock build

London (Platts)--22Nov2006

Global crude futures fell slightly Wednesday ahead of the US inventory
data due out later in the day, withdrawing from the highs posted late Tuesday
on the back of a surge in product prices.
At 1126 GMT the January ICE Brent futures contract was changing hands at
$60.12/barrel, down 27 cents. January NYMEX WTI was down 30 cents at
$59.87/barrel and the equivalent contract on ICE was also 29 cents weaker at
$59.88/barrel.
"The market is really dead at the moment. We're leading up to the long US
Thanksgiving holiday as well as the US stats this afternoon so we're
essentially waiting for them," a London-based broker said.
Analysts polled by Platts on Tuesday expect the US Energy Information
Administration and American Petroleum Institute to show a 700,000 barrel build
in crude stocks in the latest inventory report due out at 1530 GMT, as a
rebound in imports outweighs a rise in refinery utilization.
Market players said that crude market data, unless extreme, would not
provide direction to the market, which instead is more likely to come from the
refined product data.
Expectations are for a 475,000 barrel draw in gasoline stocks for the
week ended November 17. Analysts also forecast a 675,000 barrel decline in
distillate inventories, which would continue to support heating oil futures
despite moderate near-term temperature forecasts.
"I have a feeling the distillate draw could be bigger than expected and I
think the market will be very active this afternoon," a broker said, noting
that NYMEX will be closed Thursday and Friday for the US Thanksgiving holiday.
Weekly US data is often not fully digested by the end of trade on
Wednesday and typically market players finalize their positions on the
Thursday. Due to the US holiday, many traders will have to cover themselves on
Wednesday this week ahead of the long weekend, sources said.
The expected draws in product stocks pushed the petroleum complex up
higher on Tuesday. Despite low volumes, product futures pulled up crude
futures as fund buying triggered buy orders, sources said.
US gasoline inventories, which five weeks ago were more than 15.2 million
barrels above the five-year average, have shrunk to only 1.7 million barrels
above average as of November 10, according to data from the EIA.
--Jean-Luc Amos, jean-luc_amos@platts.com

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