The RSI managed to breach the 30%-line at the WTI chart yesterday, triggering a buying signal. The Stochastic remains bullish for WTI and G.Oil but has left the oversold level. The indicators are still neutral at the Brent chart as the Stochastic’s lines are already converging again and the RSI is still not giving off any fresh signals. Oil futures both at ICE and NYMEX have left their short-term downward trend channels to the top. Thus, we assume a neutral to bullish stance this morning. While oil prices started lower on Thursday in face of the discomforting build in U.S. oil inventories reported on Wednesday, they rose again in the course of morning trading, testing their first resistances at ICE and NYMEX. The bullish effect of Hugo Chávez decease had already vanished since market players focused on the ECB and on U.S. unemployment figures. In the wake of the surging euro, oil futures finally took a leap above their first resistances. Crude futures' upward potential, however, was limited here as the build in U.S. crude stocks was still weighing on WTI while Brent was hampered by the fact that the pipeline system at the Buzzard oil field had been brought in to service again. In contrast, G.Oil at ICE climbed up to its second resistance since investors felt more optimistic in face of the strong draw in U.S. distillate inventories. However, the trade volume was still limited at this point because many traders were still waiting for the ECB’s decision on its benchmark interest rate. The American crude was still benefiting from the better-than-expected U.S. unemployment figures and the slumping dollar during NYMEX floor trade, breaching several resistances in the course of trade, whereas Brent did not really gain momentum and held steady in its trading range. WTI closed with a gain of 1.3% close to its day’s high and was well supported during Asian trade. However, the North Sea crude lost ground in late New York trade.
ICE Gasoil contract for March delivery settled at 931.00 USD on Thursday. This was 4.00 USD above Wednesday's settlement. With some 29,600 deals, the traded volume was far below average. As the front month expires next Tuesday, traders are increasingly engaging in April contracts.
According to Jim Ritterbush of Ritterbush & Associates, oil futures are going to consolidate around 90.00 USD (WTI) and 110.00 USD (Brent) in the days to come. Apart from positive U.S. job market data, there is hardly any fundamentals to support the oil market. Ritterbush also said that excess supply of crude had a bearish effect on the oil market and the euro's highflight should not last for too long.
Furthermore, Hugo Chávez’ death will not make an impact on oil prices in the short term, analysts say. Oil and gas production in Venezuela has lost influence given the soaring U.S. production. Moreover, Saudi-Arabia is always prepared to cover potential bottlenecks at any time. As a last resort, the USA can always dig into its strategic reserves in case Venezuelan exports stall completely.
The fact that Saudi-Arabia intends to reduce its production by 400,000 barrel/day in 2013 will not change the countrie's ability to compensate shortages if necessary because a production raise is possible at any time. Currently, the kingdom is only adhering to OPEC guidelines.
Today, market players hold their hopes high for the release of the official U.S. job market report. The positive figures on employment and unemployment released in the course of the week give reason to expect a good unemployment rate. As employment still is the engine of the economy, traders expect positive signals for the oil market as well.
Restarting the Brent pipeline system in the North Sea has a bearish effect on the Brent price. The North Sea crude had been supported by the closure of the Cormorant Alpha platform and the important pipeline last week. The Brent-WTI spread, which has already narrowed to 19.50 USD again, may decline even more in view of Brent’s increased availability, says Harry Tchilinguirian of BNP Paribas.
After having sharply climbed to more than 1.31 USD after the ECB president Mario Draghi's positive comments on the economic development in the eurozone (Thursday afternoon), the European currency traded sideways during late US-trading and Asian trading. The euro remained in a narrow range on a high level as forex traders focus on the USA where official labor market statistics are to be released this afternoon. The euro was also able to make some headway compared to most other currencies. It hit a new 11-day high against the British Pound and even a 3-week high against the Suisse Frank. The euro also gained some ground against the Yen. The Japanese currency fell to the lowest level in 3 years against the dollar as traders' risk appetite rose. As many forex traders had already expected, the ECB left its benchmark interest rate unchanged at 0.75% yesterday, even though there had been increasing speculation over another rate cut in the next months. However, there are no indications for this, as of now. This time, Mario Draghi has not even named the strong euro as a risk for economic growth but said that the current expansive measures were still appropriate. This has stoked investors's risk appetite and bolstered the euro. The fact that the ECB keeps out of the "currency war" of other central banks and that its balance sheet is shrinking while the Fed, the BoJ and the BoE pump liquidity into the market with their bond buying programs, might boost the euro up to 1.38 USD in the course of the year, BNP Paribas estimated.
However, other analysts warn that the euro crisis is far from over and a renewed escalation would have a bearish impact on the common currency.
Technically, there are no fresh cues after the RSI gave a buying signal yesterday by surpassing the 30% line. In all, the common currency remains within its downtrend which as formed since the beginning of February, even though a bottom has formed near 1.2965 USD. The euro last sold at 1.3089 USD. Resistances are at 1,3120 USD, at 1,3140 USD, at 1,3165 USD, at 1,3180 USD and at 1,32 USD. Supports are at 1,3075 USD, at 1,3040 USD, at 1,30 USD and at 1,2965 USD.
U.S.
Oil futures are trading sideways in a narrow range with a bearish tendency this morning, showing low volatility in thin trade as market players are waiting for the U.S. unemployment rate to be released this afternoon. Positive figures of the Chinese trade balance have not made an impact at the oil market yet. The traded volume at NYMEX is about average for this time of day. Market participants are waiting for the European markets to open, for signals from forex trading as well as for the upcoming economic data with particular focus on the U.S. job market report.
Houston (ex-wharf indications 08-03)
380cst $618
180cst $656
MGO $1010
New Orleans (ex-wharf indications 08-03)
380cst $613
180cst $659
MGO $1020
Singapore (correct as of 1430hrs LT - delivered indications)
WTI is currently spiking albeit we believe this will be short lived with +$1.11. Paper for Mar is ignoring the move with 180cst +$0.75 and for 380cst -$0.75, and Apr contracts with 180cst -$1.50, 380st -$0.30. The cargo market is now adopting papers bearishness on 180cst -$1.81, and 380cst gained -$4.15 and MGO -$0.49.
The market fundamentals look like turning after several months of supply overhang. Supplies are drawing down and could be more balanced moving forward as the market structure got more backwardated. The delivered bunker premiums were ranging between $3.5 to $6.0 above cargo prices.
High premiums for prompt deliveries.
380 cst $630
180 cst $640
MGO $920
Fujairah (delivered indications 08-03)
380cst $640
180cst $685
MGO $1025
ARA (Amsterdam - Rotterdam - Antwerp)
Rotterdam remained quiet yesterday. Bunker fuel values softened slightly as there was enough fuel oil on the market and not much shipowner interest. As a consequence. Loading problems slightly improved, however, those loading at Vopak terminal reported some operational delays for prompt deliveries.
Indications for delivered bunkers:
380cst : $ 608
(1.0 %) :$ 638
180cst: $ 637
(1.0 %):$ 669
MGO 0.1%S: $ 907
