ICE gasoil contango widens ahead of next week's
November expiry
London (Platts)--6Nov2009/633 am EST/1133 GMT
ICE gasoil futures were trading lower in European morning trading
on Friday, tracking late-Thursday losses in crude and other product
futures that occurred after the 1630 GMT ICE gasoil close.
These losses materialized Thursday despite some positive US
macro data, which resulted in gains in financial markets.
"Relatively constructive macro news out of the US ignited an
upward sprint in the equity markets, [but] hardly did much to lift
commodities," energy analyst Edward Meir said in an MF Global report
Friday.
At 1119 GMT Friday, November ICE gasoil was down $9 to $630.75/mt,
with the December NYMEX heating oil contract increasing by 0.32 cents to
$2.0608/gal.
"In our view, commodity prices are still quite overbought in a
number of complexes...We should get more direction from the US nonfarm
payrolls number out later on Friday," Meir said.
Looking at structural developments, the contango in distillates
futures is widening further ahead of the November ICE gasoil expiry next
week.
At time of writing, the November/December contango was close to
reaching two-digit levels at $9.50/mt, while the December/January
contango widened to $10/mt.
"The inter-products in energy are not improving...The
combination of high flat price, high contango and low interest rates
will only translate into higher levels of stock building on floating
storage, a trend which is being confirmed by different freight brokers,"
energy analyst Olivier Jakob said in a Petromatrix report on Friday. "We
would not want to be long refining margins or long shares of refiners
for 2010 as there will be at one stage a brutal floating storage
awakening."
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