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Crude peaking may cut Lukoil by 10%

March 20/2012

(polyestertime) --Lukoil and Gazprom Neft may retreat as much as 10 percent over the next few weeks as waning concern over tensions with Iran brakes oil’s advance, according to Quesnell Capital SA.

Lukoil, Russia’s biggest non-state crude producer, has jumped 22 percent in U.S. trading in 2012, while Gazprom Neft, the oil arm of gas export monopoly OAO Gazprom, has added 12 percent as Iran’s threat to shut the Strait of Hormuz, a transit route for a fifth of the world’s oil, pushed Brent crude above USD125 for the first time in nine months. Futures (VEA) expiring in June on Moscow’s dollardenominated RTS Index were little changed at 169,455 in U.S. trading on March 16.

Bets that Brent will continue to rally have dropped from a seven-month high reached on March 9 and options on West Texas Intermediate, the most liquid oil contracts, show traders are paying less to insure against price swings, data compiled by Bloomberg show. Concern that a reduction in Iranian exports will cut global oil supply is dissipating as the U.S. and U.K. mull releasing strategic reserves and Saudi Arabia, the world’s biggest crude exporter, says it can make up for shortages.

"We’ve already seen a slowdown in the oil rally, I would expect some weakness in the oil stocks,"Ian McCall, a managing partner in Geneva at emerging-markets investment adviser Quesnell, which oversees 100 million Swiss francs (USD107 million) including Russian assets. "Once the rally tops, we may see a 5 to 10 percent pullback in Russian oil stocks over a couple of weeks."

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