ICE Brent holding above $68/barrel on Nigeria unrest

London (Platts)--24Apr2007

Global crude futures were mixed on Tuesday, with WTI slightly
marginally weaker in European morning trading but largely holding on to gains
seen Monday. Ongoing unrest and lack of stability in Nigeria following chaotic
elections over the weekend and ongoing refining problems in the US widely kept
the petroleum complex supported, brokers said.

At 1044 London time (0944 GMT) the front-month June ICE Brent futures
contract gained 18 cents to $68.33/b, retreating slightly from an
early-morning spike at $68.55/b but still holding on to some of the gains.
However, the June WTI contracts on NYMEX and ICE were down 16 cents to
$65.73/b.

On Monday, crude futures were bullish largely driven by products. NYMEX
heating oil as well as RBOB climbed up by several cents/gallon in intra-day
trading, adding to the already bullish market sentiment following civil unrest
surrounding the presidential election this past weekend in Nigeria, adding a
risk premium to crude prices.

"Market participants are struggling to assess the situation in Nigeria
following a disastrous election process. The fear of renewed supply disruption
is prompting traders to buy first and ask questions later," analysts in a
Petromatrix report said on Tuesday. "...[However] some political/oil related
incident needs soon to appear, otherwise the risk will be of the market
getting tired of rallying on each headline of shootings there," it said. Ten
people were killed during a fierce gun battle Monday between police
and militants in the oil city of Port Harcout.

The current strength of product futures contracts kept underpinned by
ongoing problems in US refining ahead of Wednesday's US inventory data
publication by the US Energy Information Administration and the American
Petroleum Institute. The latest incident was seen on Monday, when Valero
failed to restart a 97,400 b/d fluid catalytic cracker Monday at its 185,000
The unit was apparently shut for unscheduled maintenance Friday and could
not be brought up Monday, sources said.

"Nigeria remains making the market at the moment," a London-based broker
said. "However, US refinery utilization will be a key issue on Wednesday. Last
week there was an increase in capacity, which was the main mover of the market
after last week's stats. We shall wait and see what Wednesday brings on that
one," the broker added.

Product futures were mixed on Tuesday, with the May NYMEX RBOB futures
gaining 0.45 cents to $2.1952/gallon, while the May NYMEX heating oil contract
lost 0.58 cents to $1.8885/gallon. On Europe, the May ICE gasoil futures
contract was up $5.5 to $594/mt.

-- Verena Peternell; verena_peternell@platts.com