Crude nears $61 on weak dollar, cold weather forecast

London (Platts)--28Nov2006

Global crude futures neared the $61/barrel level Tuesday, extending gains
made Monday on the back of a weak US dollar and a reversal of short positions
with colder temperatures forecast for major consuming regions, a broker said.
At 1210 GMT, the January ICE Brent futures contract traded at
$60.91/barrel, up 47 cents from the overnight settle. The WTI futures contract
on both ICE and NYMEX strengthened by 34 cents to $60.66/barrel.
"The weak dollar is still having an effect and the hedge funds have got
in on the act buying both Brent and gasoil futures," a London-based broker
said.
Market players said there was no particular time when the hedge funds got
involved but a mixture of a weakening US dollar as well as forecasts for a
cold snap in the US in the near future has prompted funds to buy into the
market.
The colder-than-normal weather is expected to hit key US consuming
regions by the end of the week, with Pittsburgh forecast to be 5 degrees
Fahrenheit below average by Friday.
"Not long ago some people were a little bit bearish with the weather
predictions expecting a mild winter. All of a sudden we're having forecasts
for some below average temperatures and traders are coming out of short
positions and going long," a broker said.
Technically, traders have said the market has a more bullish feel to it,
due to the strong settle on Monday and continued rise Tuesday, although Brent
met a little resistance at the $61.00/barrel level.
Early indications of the US oil inventory data due from the US Energy
Information Administration and American Petroleum Institute on Wednesday are
of a small build in both gasoline and distillates stocks. Sources in Asia,
also expected commercial US stocks data to remain unchanged from the previous
set of data.
On the products side December ICE gasoil futures rose by $6.25/mt to
$545.00/mt at 1213 GMT. The December NYMEX heating oil contract strengthened
by 0.93 cents/gallon to $1.7145/gallon, while the December unleaded contract
on NYMEX was down 0.37 cents/gallon to $1.59/gallon during electronic trading
on Globex.
--Jean-Luc Amos, jean-luc_amos@platts.com

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