Brent falls below $60, ignoring OPEC, looking to US product build

London (Platts)--3Oct2006

Front-month ICE Brent futures fell through the important psychological
level of $60/barrel Tuesday purely on technical reasons, continuing Monday's
collapse, brokers said.
The market continued to ignore output cuts from Nigeria and Venezuela and
has briefly started to look to Wednesday's US inventory data where builds in
products are expected once again.
At 1040 London time (0940 GMT) the November ICE Brent futures contract
was changing hands at $59.70/barrel, down 75 cents from Monday's settle.
"It was a very bearish settlement last night and the down pattern has
continued this morning purely on technical trading rather than any real
fundamental news," a broker said.
On Monday, the front-month ICE contract lost over $2/barrel as hedge
funds who last week had pushed the market up around $2, squared their
positions, during thin trading.
The market has dismissed news of a combined 170,000 b/d of output cuts by
Nigeria and Venezuela, especially in the absence of a collective, formal
effort by OPEC to cut supplies. OPEC heavyweight and world's largest exporter
Saudi Arabia has yet to weigh in on the issue of curtailing supply.
Market players said that until some of the bigger producers decided to
cut output prices will not be severely affected by the current small cuts.
Traders noted that the next news item expected is Wednesday's US
inventory reports by the American Petroleum Institute and Energy Information
Administration.
Early reports suggest builds in distillate stocks and gasoline, with a
potential for distillate stocks to near an eight year high.
In other news, EU foreign policy chief Javier Solana spoke with Iran's
top nuclear negotiator Ali Larijani Monday over the phone and the two resolved
to make further contact in the next days. The last round of talks between the
two last week in Berlin failed to produce an agreement. The Western powers
want Iran to suspend uranium enrichment, which they suspect is aimed at
producing nuclear weapons.
--Jean-Luc Amos; jean-luc_amos@platts.com

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