IPE Brent crude futures fall further as mild weather sets in

London (Platts)--8Nov2005

IPE Brent crude futures in London on Tuesday extended the previous
session's losses as milder-than-normal weather across much of the northern
hemisphere continued to impact oil demand, traders said. 
     "Demand is weak from both sides of the pond," one broker at UK-based Man
Financial said. 
     Front-month December IPE Brent crude futures had fallen 35cts from the
overnight settle trading at $57.67/bbl by 1116 GMT London time. Brokers
expected the key support of $57.05/bbl to be tested later in the day after
prices touched close to that level on Monday. "That is the key support that we
are looking for," one broker said. 
     A bearish set of statistics was also expected when the US Department of
Energy delivers its latest weekly stock report on Wednesday. Early indications
pointed to a build of 800,000 bbl on distillates, an increase of 1.8-mi bbl on
crude and a 1-mil bbl hike on gasoline. Refinery runs were expected to rise by
2% as more of the idled Gulf coast capacity comes back onstream.
     Elsewhere, warmer-than-usual weather in Japan has limited kerosene demand
in the country, urging some local refiners to revise down their crude
throughput plans for November to normalize their inventories.
     Gasoil futures have also come under pressure, largely due to the milder
weather. The front-month November futures contract was trading $1.25 lower at
$522.75/mt. The front-month contract has shed over 10% since October 27. Over
the same period, the spread between the front two monthly futures contracts
have fallen further into contango from -$4.50/mt to -$11.50/mt. 
     A contango market structure means that the commodity for prompt delivery
is trading at a discount to gasoil for forward delivery. Typically, the bigger
the contango the weaker prompt demand.

For daily refiner feedstock prices, latest news and market condition analysis
request a free trial to Platts Refiner at
http://www.platts.com/Request%20More%20Information

Please visit: www.platts.com

Their coverage of energy matters is extensive!!.