London (Platts)--21Jan2008

Global crude futures headed south at the start of the week, with European
trading on Monday showing a bearish picture for the whole petroleum complex
due to ongoing economic fears regarding a possible US recession dampening
market confidence not just in commodities but also in financial markets,
sources said.

The latest downward turn in petroleum futures prices came in line with a
fall in financial markets in Asia, despite US President Bush's announcement of
a fiscal stimulus package on Friday, according to market sources.

At 10:48 GMT, front-month March ICE Brent futures fell $1.29 to
$87.94/barrel, while the February NYMEX WTI futures contract, due to expire on
Tuesday, declined by $1.55 to $89.02/b, with volumes likely to be low Monday
due to the Martin Luther King Jr Day holiday in the US.

"The selloff today is mainly due to strong losses in stock markets this
morning, triggered by US economic woes," a London-based broker said.

President Bush said last Friday that his plan would be worth "around
1%"of US gross domestic product and offer tax rebates, incentives for
businesses and other measures to encourage growth.

However, Bush's package "is seen as too late and not strong enough to
make an impact," said Najeeb Jarhom, head of research for retail clients at
Fraser Securities in Singapore. "It looks like the US is heading for a
recession or maybe already [is] in recession, looking at the data," he said.

Analysts also stressed the growing correlation between oil prices and
financial markets in recent weeks due to a lack of fundamental impulses.

"The run out of equities continues very strongly and the high correlation
seen recently between equities and oil prices means that the risk remains high
for oil prices to take the directional clue from the Dow, and this until new
oil fundamental inputs can re-create some diversification. Given that the
weather outlook is not especially strong, unless [there is] an explosion
somewhere (Nigeria remains a risk factor) it will be difficult for the oil
markets to counter the weakness inspired by the stock market fears," analysts
for Petromatrix said in a report Monday.

Looking at product swaps, the price trend was also clearly bearish, with
front-month February ICE gasoil losing $13.50 to $776/mt, while in the US,
February NYMEX heating oil declined 3.34 cents to $2.4740/gallon.

February NYMEX RBOB was down 3.61 cents to $2.2673/gallon.

--Verena Peternell, verena_peternell@platts.com