ICE Brent crude drifts lower ahead of weekly US stock data

London (Platts)--1Nov2006

ICE Brent crude futures drifted lower but still clung onto some of
Tuesday's strong gains on Wednesday as traders eyed a possible bullish stock
report from the US later in the day.
News that the UAE could reduce the number of spot crude cargoes in the
market to comply with the OPEC production cuts also lent support to prices,
said brokers.
The front-month December Brent futures contract was trading 17 cents
below Tuesday's settlement at $59.01/barrel at around 1115 GMT, but volumes
were very thin.
The contract rallied by $1.37/barrel in the last hour of trading Tuesday
before settling at $59.03/barrel.
ICE WTI for December was trading 27 cents lower at $58.46/barrel.
ICE Brent crude futures hit a 2006 low Tuesday of $57.02/barrel with
hedge funds said to be the largest sellers. "The funds were selling into
the lows," one broker said.
The UAE could reduce the number of spot cargoes to meet its commitment to
OPEC's 1.2 million b/d output cut agreed in Doha on October 19, UAE oil
minister Mohammed bin Dhaen al-Hamli said Wednesday.
Hamli also stressed the UAE's commitment to making its OPEC production
cut in full, saying that the country would achieve the 100,000-101,000 b/d cut
by using "operational flexibility" and reducing the number of spot cargoes
offered to the market.
Some brokers suggested that prices could still have some way to fall,
citing oversupply in crude supply on both sides of the Atlantic.
A broker at Man Financial said prices could fall as low as $55/barrel for
the front-month December contract.
US oil inventory data due to be released later Wednesday were expected to
show crude stocks building by 2.2 million barrels. Refinery runs were also set
to rebound by 0.75% to 86.95%.
Elsewhere, gasoline stocks are expected to post a small decline of 1.25
million barrels with distillates dropping by a similar amount.
--Paul Wightman, paul_wightman@platts.com

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