London (Platts)--6Dec2007
Global crude futures lost ground during European morning trading
Thursday, as a very bearish technical picture combined with a stronger US
dollar and mixed US stats data dragged prices lower, sources said.
OPEC's announcement Wednesday that it would leave oil production
unchanged triggered a broad-based rally, with front-month ICE Brent as well as
NYMEX WTI futures gaining more than $2/barrel in intra-day trading.
Further upward impetus came from the unexpectedly strong draw in US
commercial crude stocks of 8 million barrels, according to Energy Information
Administration data released Wednesday.
However, with product stocks building and the initial reaction on the
OPEC comments easing, prices headed south in late-Wednesday and early-Thursday
trading on very bearish technicals, brokers said.
At 12:25 GMT, front-month January ICE Brent futures were $1.41 down from
Wednesday's settle at $87.08/barrel, and by around $5/b from Wednesday's
intra-day high. Similarly, January NYMEX WTI were $1.22 lower at $86.27/b.
Middle Eastern crude futures were lower as well, with the January DME
Oman futures contract down $1.02 at $82.98/b.
"We are seeing a follow-through from last night's selling spree," a
London-based broker said.
"The technical picture looks dreadful at the moment," another
London-based broker said. "However, I think that we should start scale back
buying here as it won't be long until the funds get back and involved... so we
should see some price rebound soon as long as WTI does not fall to much below
$85/b."
A stronger US dollar against the euro and Thursday's decisions by the
European Central Bank and the Bank of England on interest rates--with market
players expecting them to stay unchanged--was influencing the petroleum
complex more than fundamentals, sources said.
"The OPEC meeting was in the end largely ignored and as with the previous
meeting the focus swiftly moves back to the upcoming decisions of central
banks. The Dollar Index gained close to 1% yesterday and is now back to the
levels of early November." analysts Petromatrix said in a report. "With no
clear signs from oil fundamentals, the Dollar Index should be a key
directional input well into next week."
European product futures started Thursday trading very weakly, with
front-month December ICE gasoil down $27.25 to $768.25/mt, tracking crude's
losses late-Wednesday.
In the US, January NYMEX heating oil and RBOB fell as well, down 3.82
cents and 2.85 cents to $2.4511/gal and $2.1885/gal, respectively.
--Verena Peternell, verena_peternell@platts.com
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