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Generally speaking, the supply situation seems to be satisfactory despite the fact that OPEC reported a drop in production. But this is largely caused by declining demand for OPEC oil. Last year, some members were still oversupplying the market in order to avoid a price explosion, they are now increasingly cutting back their production.

After thin trade on Monday due to President's Day in the USA, oil prices in London and New York started rangebound on Tuesday. In face of thin news, even the better-than-expected ZEW economic indicator failed to make a significant impact on the oil market as well as on the euro. Market participants were waiting for U.S. markets to open as traders returned from their long weekend. They seized the day to adjust their risk positions and to take profits, says Andy Lebow of Jefferies Bache. Traders were particularly focusing on the Brent/WTI spread. Since the differential between the two key contracts had considerably widened on Friday, market operators were able to take profits from their spread bets, resulting in liquidations of long positions for Brent and short positions for WTI. Thus, oil futures at ICE and NYMEX were trading in opposite directions, lacking some guiding signals. As a result, the spread of crude futures for April delivery has narrowed again to below 21 USD. On Friday, the spread had widened to about 21.60 USD. Moreover, profit-taking with NYMEX RBOB gasoline was also striking. Here, a technical selling signal at the Stochastic, which also indicated an overbought market situation, favoured a downward correction. Concerns about supply shortages at the U.S. East Coast had been supporting gasoline contracts throughout last week. In the end, the oil market consolidated at a high level yesterday and is still waiting for fresh news to give new momentum and for breaks out of the narrow technical range.

ICE Gasoil contract for March delivery settled at 999.75 USD on Tuesday. This was 8.00 USD below Monday's settlement. With some 62,500 deals the traded volume was slightly above average.

OPEC: The exports of the oil producing countries in the Arab Gulf significantly dropped in January. Saudi Arabia, Kuweit and the United Arab Emirates have cut their exports by a total of 600,000 bpd, after exports had already decreased by 350,000 bpd in December. With its exports declining by 500,000 bpd in January and by 200,000 bpd in December, Saudi Arabia was the country with the highest share in the total decline. According to analysts, this shows that the OPEC has cut its production to tackle the oversupply on the global market. The OPEC's January output is already expected to be below 30.0 mbpd.

At the G.Oil chart, the RSI has crossed the 70%-line top-down, giving off a selling signal to the market, while the Stochastic is still neutral as its two lines have not crossed yet. The RSI at the Brent chart is already touching the 70%-line and could generate a clear selling signal if this line was breached and the Stochastic’ lines at the G.Oil chart also crossed. The selling signal for WTI already dates a few days back and the RSI is still in the neutral zone. Thus, analysts see WTI’s downward potential limited at around 95.00 USD.

U.S.

Nymex losing: The Stochastic oscillator at the G.Oil and Brent chart is still slightly bearish but the selling signal already dates a few days back. The RSI had already given off a selling signal for G.Oil on Monday after breaching the 70%-line top-down. A similar scenario followed at the Brent chart yesterday, which is why indicators at ICE are considered as slightly bearish, see also technical analysis. WTI has returned to the neutral zone as the Stochastic's lines are converging again and the RSI also does not give off any new signals.

Houston (ex-wharf indications 19-02)

380cst $650
180cst $713
MGO $1050

New Orleans (ex-wharf indications 19-02)
380cst $647
180cst $708
MGO $1054

Singapore (correct as of 1430hrs LT - delivered indications)

WTI is turning bullish, gaining with +$1.21. Paper for Mar is starting to turn as well, gaining with 180cst +$2.20 and for 380cst +$1.75, and Apr contracts with 180cst +$2.20, 380st +$1.75. The cargo market is not yet responding, losing with 180cst -$3.98, 380cst -$5.80 and MGO -$0.56.

The Singapore fuel oil market fell more than $4.0 during the morning Platts window yesterday. The delivered bunker premiums were seen app. $3.5 above cargo prices. The demand was said to be slowly picking up yesterday. This morning markets are trading higher.

High premiums for prompt deliveries.
380 cst $653
180 cst $658
MDO $1000

Fujairah (delivered indications 20-02)

380cst $653
180cst $678
MGO $1020

ARA (Amsterdam - Rotterdam - Antwerp)

We have seen a fair amount of demand in the market with about 11kT in Antwerp alone causing congestion ahead of the weekend There are still higher premiums added in Rotterdam due to operational delays and limited barge accessibility creating problems for prompt in Rotterdam. Barges in particular were queuing for two-three days to be loaded.

Indications for delivered bunkers:
380cst : $ 637
(1.0 %) :$ 677
180cst: $ 662
(1.0 %):$ 715
MGO 0.1%S: $ 982