IPE Brent rebounds as cold US weather looks set to continue

London (Platts)--8Dec2005

IPE Brent crude futures in London rebounded early Thursday as continued
cold weather in the US raised concerns over possible supply shortages heading
into winter, brokers said. Front-month January Brent was trading 51cts above
the settlement on Wednesday at $57.51/bbl ata round 1145 GMT. 
     Temperatures across the US northeast were forecast to remain below
average for the coming week, causing for concern as this region is the main
demand centre for heating oil.
     Crude prices fell below $57/bbl on Wednesday after the US Department of
Energy reported a stock build in gasoline, crude oil and distillates of
2.7-mil bbl each. "We were extremely surprised to see all of the stock builds
at 2.7-mil," one broker at Man Financial said.
     Gasoil stocks in the US are now 4.8-mil bbl above the 5-year average,
according to oil consultants PFC. However, demand is down 2.5% from year ago
levels, meaning that it may take a period of sustained cold weather to boost
demand. Gasoline demand continues to recover, rising at 0.4% year on year.
     Oil imports into the US have also rebounded and are broadly in line with
the lower range of post-hurricane levels. In crude oil, imports rebounded
sharply to just below 10.6-mil bbl, the second highest level since the
hurricanes in August and September.
     In a recent report by Goldman Sachs, oil demand growth in 2006 was
forecast to rise as GDP growth is expected to outstrip expectations. In the
US, non-farm payroll data showed an increase of 215,000 jobs, pulling down the
unemployment rate to 5%. In addition, US GDP in the third quarter of 2005 was
also up to 4.3%, higher than the 3.8% that had been forecast.
     In Europe, domestic demand in the third quarter also accelerated. German
unemployment fell by more than analysts had expected and industrial production
also increased above forecasted levels, Goldman Sachs said.
     IPE gasoil futures in London were trading 25cts below Wednesday's settle
at $501.50/mt for the December contract. The spread between the first two
months on ICE futures was trading at -$16.50/mt, down from the -$14.75/mt
level seen at the beginning of December.

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