London (Platts)--3Jul2007

Crude futures retreated slightly from the strong gains of Monday's late
price rally, but remained closed to 10-month highs in early European trading
Tuesday.

     Front-month ICE Brent and NYMEX WTI both climbed above psychologically
important levels Monday on the back of favorable technicals and a weak US
dollar, which sent the most of the commodity complex higher.

     At 11:29 London time (10:29 GMT) Tuesday, August ICE Brent futures were
still holding above $72/b, down 37 cents to $72.26/barrel, while August NYMEX
WTI lost 27 cents to $70.82/b, falling below the $71/b mark.

     With Brent futures especially looking very bullish on the technical side,
further upward movement appears likely to hold August Brent's premium above
WTI stable at $1.40/b, according to brokers.

     "Historically, markets always look strong in the first week of July," one
London-based broker said. "Moreover, Brent is flagging a little bit,
technicals look bullish."

     A very weak US dollar compared to the euro and the British pound was one
of the main bullish factors in Monday's rally. In early Tuesday trading, the
dollar was within sight of its record low against the euro and at a 26-year
trough against the pound amid prospects of higher European interest rates,
dealers said.

     However, market players stressed that ongoing concerns about security
threats and stock levels are lending strength to crude futures.

     "Apart from the weak US dollar as well as the known fundamental aspects
of low gasoline stocks and geopolitical tensions, I guess the heightened
terrorist threat here in the UK is possibly having a bullish impact as well,"
said one London-based broker.

     Turning to the Middle East, the September DME Oman contract lost 65 cents
to $68.43/b, while September ICE Dubai was down 55 cents to $68.10/b. For DME
Oman, a total of 4 million barrels, or eight cargoes of Oman crude, will go to
physical delivery following the expiry of the August contract last Friday,
trading sources said Tuesday.

     Meanwhile, July ICE gasoil was up $6.75 to $631.75/mt, while in the US
product contracts were down. August NYMEX RBOB lost 1.57 cents to
$2.233/gallon, while August NYMEX heating oil was down 0.78 cents to
$2.0542/gallon.

--Verena Peternell, verena_peternell@platts.com