London (Platts)--10Dec2007
Global crude futures moved sideways in European morning trading Monday
after the more than $2/barrel intra-day selloff on Friday, when the whole
petroleum complex had abruptly reversed Thursday's gains despite a lack of any
fundamental news.
No direction came from equity markets, as traders are awaiting the
outcome Tuesday's US Federal Reserve meeting on interest rates, analysts said.
Additionally, little movement was seen in the US dollar on Friday and Monday.
At 11:00 GMT, the January ICE Brent contract was more or less unchanged,
up 5 cents to $88.69/b, maintaining a small premium to January NYMEX WTI,
which was 19 cents higher at $88.47/b.
The Brent front-month backwardation also narrowed, nearly flipping back
into contango for the first time since September.
In the Middle East, the February DME Oman contract was down 20 cents to
$84.30/b, with February ICE Dubai not changing hands at the time of writing.
"Crude is not really going anywhere so far today... it is not really
higher from Friday's close, we just saw some early morning selling out of Asia
and now a slight move back to unchanged," a London-based trader said.
Analysts expect this week's trade to be influenced by the US Federal
Reserve's interest rate decision Tuesday, as well as the weekly EIA report
Wednesday.
"The key trading input of the week should be the decision of the Fed in
regard to interest rates and the impact it will have on the Dollar Index and
volatility of equities," analysts for Petromatrix said in a report Monday.
"Oil fundamentals will also seek a confirmation that the large draw seen last
week in US crude oil stocks was due to fog disruptions."
The latest CFTC data released Friday showed that non-commercials, which
primarily comprise hedge funds, liquidated 12,030 NYMEX crude futures
contracts in the week ending December 4.
Non-commercials were long 47,072 crude futures, not a particularly large
position, but traders tend to pare positions ahead of year-end. The long
liquidation by non-commercials pushed the front-month crude contract back down
to the $87.00/barrel level.
"The investment flow data remains negative. Open interest and the CFTC
data are showing continued liquidation of positions (and mostly of long
positions). While the speculative net length is being reduced we are however
not in a scenario where fresh speculative bets to the downside are being
placed. With the WTI time spreads under pressure and as we get closer to the
Christmas holiday low liquidity with still a high volatility we should expect
to see further squaring of positions over the next 10 days," Petromatrix said.
Product futures were stable, with December ICE gasoil up $2 to
$786.25/mt. January NYMEX heating oil and RBOB futures lost 0.02 cents and
0.09 cents to $2.5045/gallon and $2.2681/gallon, respectively.
--Verena Peternell, verena_peternell@platts.com
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