London (Platts)--7May2009

Global crude futures continued to surge Thursday, smashing technical
resistance levels in its path. The upward momentum comes following positive
news in the equities markets, a weak dollar and improved sentiment sources
said.

"Resistance levels have been broken and everything is looking strong," a
commodities broker said.

At 1014 GMT ICE front-month Brent traded at $57.56/barrel, up $1.41 on
the overnight settle although off from a near six-month high of $57.78/barrel
earlier in the session. NYMEX WTI was traded at $57.92/b, a $1.58 rise.

"It looks as though we're in a mini-bubble. From a demand and supply
perspective the crude market is overvalued," a crude broker said.

"Although there's lots of oil in storage, it would appear this oil isn't
being released from storage due to the contango structure of the forward
curve, which is pushing up prices in the prompt," the broker added.

Structurally the front-month timing spreads on the forward curves of both
the ICE Brent and NYMEX WTI benchmarks have firmed markedly over the past few
days. Wednesday's settle showed a June-July timing spread of minus $1/b and
minus $1.25/b respectively for the ICE Brent and NYMEX WTI contracts. At 1014
GMT, the ICE Brent and NYMEX WTI timing spreads were trading at minus $0.94/b
and minus $1.11/b respectively.

"However, the biggest factor impacting the markets is the equity
markets," the broker concluded.

According to a commodities broker, much of the upward momentum in the
crude market has come from a weaker dollar, citing the recent rally to be a
short term phenomenon.

"The dollar has been getting smashed, which has helped the commodity
rally," he said. "Gold has also remained strong. This could be due to the fact
that participants are using gold as a currency hedge against the sliding US
dollar, or using it to protect themselves in case this crude rally is short
lived," he added.

"If the rally continues we could be heading towards $60/barrel. However,
I don't think the rally will be sustained and any profits will be short term.
I can't imagine people taking any long term positions" the broker said.

"I predict a correction in the rally before the end of the week. From a
technical basis this would suggest otherwise, however, fundamentals will
prevail."

In the product markets, meanwhile, front-month RBOB recorded a fresh 2009
high.

"Fundamentally, memorial day is approaching and people in the US will
take to the roads which should push up RBOB values. However, despite the EIA
draw yesterday, there remains lots of gasoline in storage with good
availability," the crude broker said.

At 1014 GMT front-month RBOB traded at $1.6672/gal, a 3 cent rise. NYMEX
heating oil also added to Wednesday's settle, trading at $1.5038/gal, a 3 cent
rise.

In the equity markets, global bourses were buoyant during the early
morning trading on speculation that the banking world may not require as much
capital as was initially feared, sources said. In the currency markets, the
ICE Dollar Index traded below the 84 point marker, trading at 83.940 points, a
0.037 fall.
--George Johnson, george_johnson@platts.com