ICE Brent falls on market skepticism about OPEC's output cut

ICE Brent falls on market skepticism about OPEC's output cut

London (Platts)--24Oct2006

ICE Brent crude futures in London extended Monday's losses as market
skepticism about OPEC cutting real barrels prompted fears of oversupply and
pushed prices lower, traders said.
The front-month December Brent futures contract traded 43 cents off
Monday's settlement at $58.78 per barrel, just shy of the intra-day low so
far.
"Hedge funds have been heavy sellers amidst the lack of bullish news,"
Man Financial said adding that market is looking for more concrete evidence of
real cuts.
On October 19, OPEC agreed during an emergency meeting in Doha to cut
actual production by 1.2 million b/d from current output of 27.5 million b/d.
"Since OPEC's cutback announcement, there has been much focus on the
credibility of the deal with skeptics debating the distribution of cuts and
especially the relatively sizable ones attributed to countries that are
already operating below their quota levels such as Venezuela, Indonesia and
Nigeria," Kevin Norrish, energy analyst at Barclays Capital, said in a report.
The London-based CGES said that although Saudi Arabia had succeeded in
getting other OPEC members to share the burden of price support, for the
agreement to have real credibility the starting points for individual
reductions should have been published.
On Monday, Saudi Arabia informed its Asian customers of an 8% reduction
in November allocations.
ICE WTI for December was trading 35 cents off Monday's settlement at
$58.48 per barrel. ICE gasoil futures for November delivery was trading
$3.75/mt higher than Monday's settle on colder than average temperatures
across much of the US northeast, a major heating oil consuming region.
In Europe, temperatures were set to be above average for the next few
days.
--Paul Wightman, paul_wightman@platts.com

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