Oil prices retreat after hitting new 2007 high Monday

London (Platts)--27Mar2007

Oil prices fell back Tuesday after hitting a 2007 high yesterday on growing
tensions between Iran and the West and concerns over tight US gasoline
supplies ahead of the summer driving season.
May ICE Brent hit $64.63/b in intra-day trading on Monday, the highest
value seen since early December 2006. Font-month NYMEX RBOB rose to
$2.0720/gallon, a value last seen in mid August 2006
At 1104 London time, the front-month ICE Brent futures contract was down
30 cents to $64.11/barrel, still holding on to 2007 record highs seen on
Monday. Similarly, the May WTI contracts on ICE and NYMEX lost 41 cents to
$62.50/barrel.
"The ongoing tensions surrounding Iran and refining problems in the US
are keeping petroleum futures underpinned. With some market participants
expecting another draw in US gasoline stock levels this week, supply fears
ahead of the driving season are everywhere," a London-based broker said.
"Moreover, the unusual development of widening Brent/WTI spreads also
reflects WTI's ongoing weakness and fundamental oversupply vis-a-vis Brent,"
he added.
The current May WTI/Brent spread is at a strong discount of $1.61/barrel,
reflecting excess crude supplies in the US Mideast US, a broker said.
Traders said the shift in the crude spreads is reflecting fundamentals in
the US Midwest, which is awash with light, sweet crude because of refinery
outages and increased supply.
Product futures held Monday's gains. April NYMEX RBOB and heating
oil contracts were seen down 0.57 cents and 0.86 cents at $2.0620/gallon and
$1.7675/gallon respectively. In London, April ICE gasoil lost $2.50 to
$551.75/mt.
-- Verena Peternell; verena_peternell@platts.com