IPE Brent crude extends decline following bearish US DOE data

London (Platts)--10Nov2005

IPE Brent crude futures in London extended losses Thursday with the US
weekly inventory report and warmer temperatures providing bearish sentiment on
the energy complex. 
     Since Nov 4, the front-month December futures contract has fallen almost
$4/bbl. By 1009 GMT the December IPE Brent contract was trading at $56.36/bbl,
down 52 cts from Wednesday, it's lowest price since Jul 22.
     "The fall is an overflow from yesterday's bearish US stock data, and
prior to that the obvious market mover has been the warmer temperatures across
the northern hemisphere, severely reducing gasoil demand," a London-based
broker said. 
     The US Department of Energy inventory report showed a crude stock build
of 4.5-mil/bbl, almost 3-mil bbl higher than analyst projected, which was
driven by a sharp rise in imports and boosted domestic production. 
     Refinery utilization was up 1.5% to 84% as US Gulf crude production is
gradually recovering after damage caused by Hurricanes Katrina and Rita.
     The International Energy Agency Thursday cut forecasts for global oil
demand growth this quarter and in 2006 and said markets seem to have
"weathered the worst" of disruptions caused by Hurricanes Katrina and Rita.
     Global oil demand this quarter will rise by 1.28-mil b/d, 400,000 b/d
less than expected previously, the adviser to 26 industrialized countries said
in a monthly report. "The IEA cutting demand forecasts is yet more bearish
news. It doesn't help those holding long positions," trader said in response
to the IEA news.
     Traders see support levels for December Brent at around $59.50/bbl and
$55.50/bbl and resistance levels of $56.75 and $57.10/bbl. These may be tested
later in the day as the Energy Information Administration announces the latest
natural gas storage volumes, one broker said. 
     "The impact of the storage number will affect heating oil which in turn
may push or pull on crude," a source said.
     The IPE November Gasoil futures expires later Thursday still trading at a
large $13/mt discount to the December contract. At 1011 GMT, the November
contract was valued at $519.75/mt, down $10.25 from Wednesday's settle.

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