Prices retreat slightly but stock concerns remain

London (Platts)--15Oct2004

Benchmark crude prices in New York and London retreated slightly from recent
highs Friday but remained close to record levels amid continued concern about
levels of distillate stock cover ahead of the northern hemisphere winter.
December Brent futures on London's IPE were down 41 cts at $49.68/bbl at 1410
GMT. November crude futures on the New York Mercantile Exchange opened at
$54.60/bbl, $0.28/bbl down on the $54.88/bbl all-time high reached Thursday.

Prices rose sharply Thursday after the US Department of Energy reported a
2.44-mil bbl draw in distillate inventories, the fourth straight week
inventories in this category have declined. Within the overall distillate
stock draw, heating oil stocks fell by 1.2-mil bbl, with a 600,000 bbl decline
in the key consuming East Coast region, sparking fears that stocks could be
insufficient too meet demand in the event of a severe winter.

Gasoil stocks are also below seasonal normal levels in the key European market
of Germany. "The market is expecting prices to remain high through the winter
as heating fuel stocks are inadequate to meet demand," an IPE Brent dealer
said. A number of crude supply issues have also played a part in the recent
surge in prices, including the damaging effect on US Gulf of Mexico crude
production of Hurricane Ivan. Although Ivan swept through the Gulf in
September, over 470,000 b/d of output remains shut in, according to the latest
information from the US Minerals Management Service. 

A four-day general strike in OPEC member Nigeria ended Thursday without having
disrupted crude exports, although unions warned that the strike could resume
if a recent retail price hike is not reversed. A dispute between rig owners
and workers offshore Norway has also caught traders' attention, with some
55,000 b/d of crude output currently shut in by strike action.

Copyright © 2004 - Platts

Please visit:  www.platts.com

Their coverage of energy matters is extensive!!.