IPE Brent retreats as hurricane fears recede

London (Platts)--18Oct2005

Brent crude futures on London's International Petroleum Exchange fell
early Tuesday, reversing Monday's gains as fears that tropical storm Wilma
would likely avoid the main oil producing infrastructure in the Gulf of Mexico
and swing northeastwards in Florida, traders said. 

     "The threat from Wilma seems to be disappearing, but it will become
cleared over the next few days," one IPE broker said. 

     The front-month December futures contract was trading 81cts below
Monday's settlement at $59.75/bbl, hovering just above the intra-day low so
far. The inter-month spreads have weakened in the past few days implying that
there is an ample supply of oil. The structure of the market is in contango
where the front-month is trading at a discount to the second month and this
spread has fallen from -14cts to around -50cts in the past few days.

     Crude prices rallied Monday on an explosion at Citgo's 265,000 b/d
Houston refinery and on initial fears that tropical storm Wilma would enter
into the Gulf of Mexico next week.

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