London (Platts)--7Aug2007

Global crude futures recovered slightly in European morning trading on
Tuesday from the massive price plunge along the sector that shook the
petroleum complex on Monday, triggered by bearish technicals and a lack of
fundamental support, sources said.
     Moreover, concerns over possible softening in the US economy following a
series of weaker-than-expected economic data and profit-taking from large long
speculative positions in crude exacerbated the downward move.
     Front-month ICE Brent as well as NYMEX WTI and all product futures saw
substantial losses during Monday trading, with WTI so far losing around 10% of
its value since the new all-time record high of $78.77/barrel, seen last week.
     At 1056 London time (0956 GMT) on Tuesday, September ICE Brent looked
better again, up 15 cents to $71.32/b, in line with positive signals from the
European financial markets this morning, sources said. However, September
NYMEX WTI extended losses, down 23 cents to $71.83/b, with its backward
structure at the front shrinking to one-digit numbers.
     Looking eastwards, October ICE Dubai lost 8 cents to $66.34/b, while
October DME Oman was up 23 cents to $67.33/b.
     "Brent slightly recovered this morning, which is going hand-in-hand with
recovering European stock markets on Tuesday," a London-based broker said.
     He added, "I think the market has found some support at the current
levels and we are certainly seeing some hedgers who have been absent in the
market, reappearing with their buy orders. I think the speculators are going
to wait for the US stats before reassessing the scenario." 
     Despite the slight upward trend for Brent on Tuesday, technicals continue
to look bearish ahead of the next set of US stock data, published on
Wednesday, analysts said.
     "The equity markets have managed to reverse the losses of the previous
day but it will be a harder task for oil to do the same. WTI is back to the
price levels of early July and from June 26 to July 31 the large speculative
funds have added 67,000 fresh longs that have now gone into losses or
break-even at best," analysts for Petromatrix said in a report Tuesday.
     Fundamentally, the market situation does not seem to have changed since
last week, thereby not influencing the recent strong losses, brokers added.
     "It is the financial oil premium that is being eroded. Forced liquidation
because of cash calls elsewhere and tighter credit lines are one aspect of the
sell-off. Another is profit taking to bolster poor results in other markets.
     Many hedge funds are turning out not to be hedge funds at all, but merely
long-only investors in a spread of asset classes, all which have fallen at the
same time," PVM brokers stressed in their fundamental analysis report on
Tuesday.
     Turning to product futures, the picture was mixed, with August ICE gasoil
still down $6.75 to $616/mt, while in the US, some recovery took place.
     September NYMEX RBOB and heating oil were both up, gaining 0.49 cents and
1.51 cents to $1.9308/gallon and $1.9544/gallon, respectively.
-- Verena Peternell, verena_peternell@platts.com