ICE Brent holds firm awaiting more details about OPEC cutback

ICE Brent holds firm awaiting more details about OPEC cutback

London (Platts)--16Oct2006

Crude oil futures in London appeared to have found temporary support as
the market waited for further direction from OPEC, meeting in Doha Thursday to
discuss possible output cutbacks, brokers said.
Some mildly bearish sentiment crept into the market following media
reports that the Norwegian authorities had allowed Shell to restart the 80,000
b/d Draugen field in the Norwegian sector of the North Sea.
The front-month November Brent futures contract traded 38 cents above
Friday's close at $59.80/barrel ahead of expiry at the end of the day. Prices
have slipped back from the intra-day high of $60.16/barrel.
"The market is going to want to see that OPEC is serious about removing
real barrels from the market," one broker at Man Financial said. "Its all
about what they do or indicate they are prepared to do," the broker added.
Qatari oil minister Abdullah al-Attiyah confirmed Sunday that OPEC
ministers would hold an emergency meeting in the Qatari capital Doha on
Thursday to discuss details of a 1 million b/d cut from actual production to
prevent a further price slide.
"The ministers will discuss at the emergency meeting details relating to
a reduction of one million barrels per day from actual production in an effort
to stop the fall in oil prices," said the statement.
Attiyah's statement made clear that ministers would discuss a reduction
from actual output rather than from the group's notional 28 million b/d
ceiling.
However, Indonesia will call on OPEC to cut a planned 1 million barrel
per day cut from the group's notional ceiling of 28 million barrels per day,
not from actual production, at an emergency meeting in Doha on October 19, the
country's energy and mines minister Purnomo Yusgiantoro said Monday.
"Indonesia wants the cut based on the quota with a pro-rata mechanism,"
Purnomo said. "We don't want the cut based on actual production because
Indonesia doesn't meet its OPEC quota."

SHELL RESTARTS NORWEGIAN DRAUGEN
Shell has been granted permission to restart its 80,000 b/d Draugen field
in the Norwegian North sea which will help to offset the 315,000 b/d output
shut in Friday.
Statoil and Shell Friday said they were closing down three Norwegian oil
fields, shutting in some 315,000 b/d of output following an order from
Norway's Petroleum Safety Authority to fix a number of unsafe lifeboats. The
fields are expected to be back online in one to two weeks.
"The combined loss...of mainly light sweet crude should support prices,
and already appears to be doing so," Calyon head of energy market research
Mike Wittner wrote in a report.
However, another analyst noted that even if the Norwegian shutdowns last
for as much as 10 days, less than 3 million barrels of supply is expected to
be impacted, a small amount in comparison with the approximate 30-35 million
barrel surplus currently existing in the US alone.
Separately, BP said Friday it expected to restart its Prudhoe Bay
production over the weekend and expects output at the Alaska North Slope field
to be more than 400,000 b/d within the next few days.
Prudhoe Bay production dropped to about 20,000 b/d Tuesday after severe
winds caused the electrical malfunction of distribution lines and several
field production facilities were shut.
--Paul Wightman, paul_wightman@platts.com

For more news, request a free trial to Platts Forward Curve Oil at
http://www.platts.com/Request%20More%20Information/

Please visit: www.platts.com

Their coverage of energy matters is extensive!!.