London (Platts)--8Feb2008

Global crude futures rallied higher in European morning trading on
Friday, extending late Thursday's gains which were led mainly by a
strengthening in heating oil futures due to expected colder temperatures along
the US Atlantic coast, sources said.
The bullish weather outlook spurred some short-covering ahead of the
weekend, as market players were buying back position, underpinning the whole
petroleum futures complex.
Moreover, a rebound in US equity markets late Thursday despite a stronger
US dollar also supported crude futures.
At 10:48 GMT, front-month March ICE Brent futures had gained $1.26 to
$89.77/b. The March contract for NYMEX WTI futures also hovered around $89/b,
trading at $89.22/b, up $1.11 from Thursday's settle.
Looking at the curve structures for crude oil, the March/April spread on
WTI continued to jump between backwardation and contango, with no clear
pattern emerging.
"WTI managed to rebound on the strong $86/b support but it is still
facing a few hurdles. The time curve on crude oil continues to flatten out
both on WTI and on Brent," analysts for Petromatrix said in a report.
"The market is dominated by a bit of cold weather influence today,
heating oil was the driver on Thursday...people are buying back positions as
some short-covering is going on," a London-based broker said.
Record-breaking warm temperatures on the US Atlantic Coast on Wednesday
were replaced by more seasonal weather Thursday, and very cold thermometer
readings were forecast to arrive in the region over the weekend.
More seasonal weather could portend a pick-up in distillate demand, which
has been soggy given the lack of cold-enough temperatures to cause a draw on
heating oil stocks, sources said.
As a result, the main market maker on Friday remained the distillates
complex, with the February ICE gasoil contract, due to expire on Tuesday,
jumping $23.75 to $812.50/mt at 10:48 GMT after hitting an intra-day high of
$813.25/mt, as the contract caught up with post-settlement developments on
Thursday.
In the US, March NYMEX heating oil gained 4.31 cents to $2.5016/gallon,
while March NYMEX RBOB also took advantage of the upswing, increasing by 2.72
cents to $2.2950/gallon.
--Verena Peternell, verena_peternell@platts.com