London (Platts)--18Jan2008

Global crude futures found some floor in European morning trading on
Friday ahead of the long US weekend, stabilizing after Thursday's strong
selloff triggered by US recession fears and the potential impact on oil
demand.
During the course of the morning, WTI fell through the strong support
level of $90/barrel before recovering again, with sentiment remaining bearish
despite some short-covering activity, sources said.
At 11:00 GMT, front-month March ICE Brent futures were up 20 cents to
$88.95/b, while the NYMEX February contract was 2 cents lower at $90.11/b.
The February NYMEX WTI contract is due to expire on Tuesday, so trading
activity today could be slightly distorted, analysts said.
"Short-covering ahead of the long US weekend [for Martin Luther King Jr
Day on Monday] brought some support to the market this morning and technically
this seemed like the right move," a London-based broker said.
"However, I suspect that the bearish sentiment of the last days will
continue this afternoon," the broker added.
Ongoing US economic fears dominated Thursday's trading session, with both
WTI and Brent heading south as remarks from Federal Reserve Bank Chairman Ben
Bernanke and incoming economic data painted a bleak picture of the US economy.
"Recently, incoming information has suggested that the baseline outlook
for real activity in 2008 has worsened and that the downside risks to growth
have become more pronounced," Bernanke said. "In particular, a number of
factors, including continuing increases in energy prices, lower equity prices,
and softening home values, seem likely to weigh on consumer spending as we
move into 2008."
Lower consumer spending suggests a potential slowdown in petroleum demand
growth.
"The crisis of confidence on the economy is far from over. Lacking a
proper assessment on its impact on oil, the models have turned into trading
oil as a derivative of the Wall Street sentiment... developments on Wall
Street to be watched closer than ever," Petromatrix analysts said in a report
Friday.
The trend in product futures was generally positive, with February ICE
gasoil futures gaining $1 to $787/mt and February NYMEX heating oil up 0.85
cents to $2.512/gallon.
February NYMEX RBOB was 1.02 cents higher at $2.277/gal.
--Verena Peternell, verena_peternell@platts.com