London (Platts)--22Aug2008

Global crude futures softened in early European trading Friday, reacting
to a recovery in the US dollar amid concerns that Thursday's strong rally was
overdone, sources said.

"The spike in energy [on Thursday] brings up the question of whether this
latest move is a dead cat bounce, or the start of something more meaningful,
one that could perhaps vindicate bulls like Goldman Sachs, who predicted on
Wednesday that we could see the old highs by some time this year," MF Global
said in a report. "Our negative view of the market is based on our belief that
yesterday's move was way overdone."

At 1056 GMT, the October ICE Brent contract, which rallied $5.41 or 4.8%
in yesterday's session, traded at $119.14/barrel, down $1.02 from the
overnight settle. The October NYMEX was down 94 cents to $120.24/b.

"The market is responding to the dollar," a source said, referring to the
strong intraday correlation that currently exists.

The ICE Dollar Index was at 76.557, recovering about half of Thursday's
1% fall.

"The direction of crude oil today should still be dependent on asset
allocations and the dollar; and a key input to the global markets will the
Bernanke speech later today in Jackson Hole," Petromatrix oil analysts said in
a report.

Recent global geopolitical tensions involving Russia, the world's second
biggest oil producer, whose slow withdrawal of troops from Georgia and strong
opposition to the recent US agreement with Poland to build an missile defense
system, have added support to prices, sources said.

"There are various geopolitical tensions out there that are difficult to
quantify," a London-based broker said.

"There is a very bad atmosphere between Russia and the West, after the US
signed the agreement with Poland," an analyst said. "Russia could easily use
their power in energy."

There are also growing concerns that should prices fall below $110/b OPEC
will reduce output at its September 9 meeting, sources said.

"Prices before the meeting will be quite important. If the market is $110
or lower they will probably cut production," an analyst said.

"Some are worried about OPEC's upcoming meeting on September 9,
especially if the cartel moves towards a cut, but with prices still high and
the Saudis very much in the driver's seat, we doubt such a proposal will gain
much traction," MF Global said.

In products markets, the September NYMEX heating oil contract traded at
$3.2740/gallon, down 2.66 cents, and the September NYMEX gasoline contract
lost 3.52 cents to $3.0100/gal.

The September ICE gasoil contract fell $12.75 to $1,056.75/mt.
--Brian Murphy, brian_a_murphy@platts.com