London (Platts)--5Jun2007
Global crude futures stabilized early Tuesday, falling back slightly from strong gains seen on Monday but nonetheless remaining high, with July ICE Brent hovering around $70/barrel, brokers said. Crude prices rallied on Tuesday on the back of technical-driven buying and supply concerns surrounding cyclone Gonu, which is approaching Oman. A surge in natural gas and heating oil futures due to expectations of hot weather also pushed crude prices higher. At 1014 London time (0914 GMT), front-month July ICE Brent futures was unchanged from Monday's settlement at $70.40/b, while July NYMEX WTI inched down 32 cents to $65.89/b. "Prices are drifting sideways this morning and it seemed like yesterday's bullish factors such as cyclone fears close to Oman have lost their power to push prices higher," a London-based broker said. "Front month RBOB is much weaker today, which is likely to also drag down prices across the sector," he added. Cyclone Gonu is expected to reach the coast of Oman some time Tuesday afternoon with strong winds and heavy rains expected to remain for up to three days. However, the Oman Meteorological Department expects the cyclone to be much weaker by the time it hits land and is not expecting too much damage to housing and infrastructure. With regard to shipping in the area, the Department sees no threat to traffic passing through the Straits of Hormuz. "The tropical storm seems like a good reason with the potential threat to the Hormuz Straits and is a pretext to try to push up the market. But the RBOB contract will need to be higher as well (to support Brent above $70/b)," said Frederic Lasserre, head of commodity research at Societe Generale. Product futures were also lower Tuesday, with only July NYMEX heating oil holding on to Monday's gains, up 0.27 cents at $1.9673/gallon. July NYMEX RBOB dropped 2 cents to $2.2180/gallon, while June ICE gasoil lost $2 to $610.25/mt. --Verena Peternell, verena_peternell@platts.com
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