ICE Brent futures fall by $1 ahead of Fed meeting

29 April 2008 09:35  [Source: ICIS news]

SINGAPORE (ICIS news)--Crude futures prices moved off recent highs on Tuesday afternoon in Asia, with ICE Brent falling by more than $1/bbl and NYMEX light sweet crude futures slipping below $118/bbl ahead of a keenly awaited meeting of the US Federal Reserve.

At 07.35 GMT on Tuesday, June ICE Brent futures were traded at $115.88/bbl, down $0.86/bbl from the previous close, after earlier falling to a low of $115.72/bbl.

Meanwhile, June NYMEX light sweet crude futures were traded at $117.98/bbl, down $0.77/bbl from Monday’s settlement price. Earlier, the contract fell to a low of $117.91/bbl.

Analysts have speculated that the US Federal Reserve, which meets on Tuesday and Wednesday this week, may impose only a modest cut or no cut at all on US interest rates.

Such moves are expected to result in funds moving out of energy and other commodities and into the US dollar.

Crude futures have reached a new record high in recent days, with June NYMEX light sweet crude futures peaking on Monday at $119.93/bbl, amid heightened supply fears following civil unrest in Nigeria and industrial action in the UK, which affected North Sea oil production.

Nigerian oil production was reported to have been halved due to recent civil unrest. Sabotage attacks last week on pipelines in the Niger Delta forced Shell to shut in further production, bring the total volume shut-in by the company to over 500,000 bbl/day. 

Meanwhile, ExxonMobil advised that it had totally shut down all of its Nigerian crude production due to the ongoing oil workers' strike and declared force majeure on all loadings. It was estimated that this was close to 800,000 bbl/day.

Striking oil workers at the key 210,000 bbl/day Grangemouth refinery in Scotland returned to work on Tuesday.

Flows along the Forties pipeline which carries 700,000 bbl/day of North Sea oil production were expected to resume within a day of the restart of the refinery, although full flow rates will take some days to restore.

The pipeline has been shut-in since Sunday as the strike action cut power for pumping the crude to the Hound Point export terminal.

($1 = €0.64)

By: James Dennis
+65 6780 4359

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