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Oil futures at ICE and NYMEX had already traded with a bearish tendency Thursday morning as a reaction to the FOMC minutes and the API data. Adding to this were rumours about Saudi-Arabia increasing its production output in the coming month and the UN’s compromise proposal to Iran prior to the resumption of nuke talks next week. Thus, futures in London and New York had already breached their first supports early on, triggering even more technical sellings after prices fell below their previous day’s lows. In the course of morning trading, more bearish signals came from the disappointing PMIs in Germany and the euro zone, which weighed on dollar-traded futures. Only WTI’s support at 93.50 USD shortly stopped the price slump. When another wave of rather disappointing economic data was released in the USA, it cast even more doubt on a recovery of demand and consequently, more selling orders were triggered. Investors’ sentiment, which had already been marred by the Fed meeting’s results, was then confirmed by the build in crude inventories reported by the DoE at 5 p.m. As a result, traders liquidated more long positions. The higher-than-expected draw in product inventories only had a brief bullish effect on crude and heating oil futures at ICE and NYMEX and merely drove up RBOB gasoline in New York, which closed below its opening price nonetheless. In the end, all oil futures in London and New York closed with losses, with WTI reaching a 6-month low at 92.63 USD and closing at 92.84 USD, which is also the lowest settlement price this year. The RSI at the ICE charts has turned into the oversold area, which indicates a slight upward correction, not least because the Stochastic shows an oversold market situation at each chart. By falling below the 30%-line, the RSI at the WTI chart is also moving in the oversold direction. However, as WTI and G.Oil slid below their medium-term support lines, downward potential arose for both NYMEX contracts.Due to the strongly oversold market situation we expect prices to correct upwards before continuing downwards.

ICE Gasoil contract for March delivery settled at 981.50 dollars on Thursday. This was -14.50 dollars below Wednesday's settlement. With some 58,400 deals the traded volume was about average.

Disappointing economic data throughout Europe and the USA dampened investors’ optimism that the world economy is recovering and thus, demand. After several Fed members demanded to stop quantitative easing earlier than planned or at least restrict expansive measures, the negative economic data and the strong build in crude added fuel to the fire. After the strong price slump this week, traders should be cautious to engage in more short positions, especially because nuke talks with Iran and the West are to be resumed next week. According to the IAEA, Iran started installing new and technologically advanced centrifuges at a nuclear plant. This could again weigh on negotiations which, if without any result, would have a bullish effect on the oil market.

In the short term, heavy winter storms, which are currently raging in the U.S. Mid-West but already advances towards the East Coast, could generate more demand for distillates.

Oil futures have seen a slight upward correction after yesterday evening's considerable losses, as the euro and equities slightly recovered as well. Since ICE Brent was able to breach its first resistance and the ifo's German business climate index published in the course of the morning exceeded expectations, which also bolstered the euro and equities, the North-Sea crude oil blend climbed up to 114,65 Dollars. ICE Gasoil and the WTI were dragged along, testing their first resistance lines. At these levels, buying orders ebbed, however. There are no more important economic indicators to be published today.

The euro was slightly recovered in electronic trading this morning after it had been unable - during Asian trading - to significantly pull back from its lows. Traders explained that the persisting weakness of the euro was due to the disappointment regarding the economic development in the euro zone after yesterday's weak European economic indicators and given the insecurity caused by the elections in Italy which are going to take place this weekend. On Thursday, the euro had already been pressured by the FOMC's meeting minutes. The dollar climbed to 6-month high against several currencies after the central bankers had indicated that the Fed's expansive measures might end sooner than expected. The euro's highs of more than 1.37 USD seem long gone. In the past two days alone, the common currency has lost considerable ground against the dollar. This trend continues at the end of this week. The elections in Italy (this weekend) should give new clues for the euro/dollar parity. Analysts fear that there actually is a possibility that Silvio Berlusconi wins. In this case, the euro is likely to continue depreciating. Currency strategist Kathy Lien of BK Asset Management expects that the EZB could take further expansive measures to keep a lid on the downside risks for the euro. In the past few minutes, the euro was able to breach its resistance at 1,3230 USD as data on economic sentiment provided by the ifo this morning had come out better than expected. At the euro charts, neither the stochastic indicator nor the RSI provide new cues. Technically, a down trend has formed which provides some slack down to 1,3140 USD. The euro last sold at 1,3231 USD. Supports are at 1,3180 USD, at 1,3160 USD, at 1,3140 USD and at 1,31 USD. Resistances are at 1,3220 USD, at 1,3230 USD, at 1,3290 USD and at 1,33 USD. German economic indicators: • GDP 4th quarter -0,6%. Forecast: +0,1%; previous quarter: +0,2%

U.S.

Nymex losing: In line with a strong drop in refinery run rates, the DoE reported, as did the API the night before, a considerable build in US crude oil stocks while distillate and gasoline inventories decreased more than expected by both agencies. The figures in detail:

Lower refinery runs lead to a stronger build in crude stocks than the API and the DoE had forecast, being at the highest level since July 2012 and also at the highest level in this week of the year since records began in 1082. Not only refineries demanded less, imports and U.S. production also increased in the reported week, adding to the build in crude. In contrast, distillate and gasoline inventories declined more than expected, largely caused by dropping imports and slightly higher demand for gasoline (+0.033 mbpd). Demand for distillates slightly fell (-0.134 mbpd), however, heating oil stocks declined in the populous key region at the East Coast. In all, the strong bearish build in crude balanced out the bullish effect of the build in products. Thus, the figures are considered to be rather neutral.

Houston (ex-wharf indications 21-02)
380cst $630
180cst $720
MGO $1045

New Orleans (ex-wharf indications 21-02)
380cst $633
180cst $723
MGO $1050

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

WTI is dropped sharply yesterday and is still down losing -$0.52. Paper for Mar is mirroring the losses with 180cst -$4.10 and for 380cst -$4.00, and Apr contracts with 180cst -$4.10, 380st -$4.00. The cargo market is losing very sharply with 180cst -$11.22, 380cst -$12.22 and MGO -$2.51.

The Singapore fuel oil market fell more than -$11.0 during the morning Platts window yesterday tracking the previous weaker crude movement. The latest Singapore heavy residual inventory reported a build of +1.79 mbbl to 20.63 mbbl. The delivered bunker premiums were seen at $3.5-4.5 above cargo prices.

High premiums for prompt deliveries.
380 cst $637
180 cst $642
MDO $980

ARA (Amsterdam - Rotterdam - Antwerp)

Suppliers in Rotterdam were long and keen to offer fuel oil and gasoil as they had long positions and were keen to sell prior to further expected drops in crude. Meanwhile, loading installation issues have been causig problems for prompt supplies. Suppliers reported big volumes of inquiries at the port of Antwerp.. Barges are slightly tight in Antwerp for over the weekend.

Indications for delivered bunkers:
380cst : $ 622
(1.0 %) :$ 662
180cst: $ 662
(1.0 %):$ 715
MGO 0.1%S: $ 982