Global crude prices climb as US distillate stocks fall

Global crude prices climb as US distillate stocks fall

London (Platts)--9Nov2006

Global crude oil futures climbed higher Thursday after the
larger-than-expected US distillate stock draw fueled Wednesday a rally back
towards $61/barrel, brokers said.
The front-month ICE Brent futures contract traded 75 cents above the
settlement at $60.34/barrel at 1111 GMT. NYMEX WTI for December delivery
climbed 50 cents at $60.33/barrel. Elsewhere, ICE WTI for December was up 52
cents at $60.37/barrel.
"The distillate stock draw certainly fueled the rally," one broker at Man
Financial said.
In Wednesday's US stock report, distillate inventories fell by 2.7
million barrels against a projected decline of just 715,000 barrels. The level
of distillate inventories are now 17.8 million barrels above year ago levels
having dropped 11.3 million barrels over the past 4 weeks.
Crude stocks rose a smaller than expected 400,000 barrels contrasting a
projected 1.2 million barrel build. A sharp drop in crude imports offset an
unexpected decline in refinery crude inputs.
According to the Energy Information Administration, PADD III (US Gulf
Coast) crude imports fell 635,000 b/d week-over-week to 5.816 million b/d.
Imports had been particularly strong the prior week, however, due to a backlog
of ships offloading following the brief closure of the Louisiana Offshore Oil
Port in mid-October due to inclement weather.
Crude oil stocks in the US stand at 334.7 million barrels, up 11.1 million
on year ago levels. However, despite the surplus against last year, the
International Energy Agency's Claude Mandil has said that they "remain
concerned" about OPEC's decision to curtail crude supplies byt1.2 million b/d
at their recent meeting.
"OPEC is saying there are a lot of commercial stocks," Mandil told
reporters in Singapore. "But [in the OECD countries] they are at 55 days of
forward demand, which is not exceptional," said the executive director of IEA,
energy advisor to 26 developed countries.
In a recent report by Barclays Capital, they said that forward cover for
US crude stocks was at 22.1 days, down 0.6 days from a year ago but still 2
days above the 5 year average.
The IEA maintains that crude prices at $60 per barrel are still too high.
Executive director Claude Mandil said "many OPEC officials are saying we have
to do [cut output] because prices are too low," Mandil said. "They are exactly
the opposite. They are too high." He said it was a cause for concern "that
OPEC is trying to put a floor at $60. Prices should go down much below $60."
--Paul Wightman, paul_wightman@platts.com

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