While ICE futures fell below their first support during morning trade, WTI failed to do the same and held steady in its technical trading range. At ICE, prices are more susceptible to the uncertainties surrounding the bailout package for Cyprus. According to Dominick Chirichella of the Energy Management Institute, the whole Cyprus issue could fade to the background again in the short term. But as soon as new problems arose in other countries such as Italy, Spain and Ireland, the Cyprus’ crisis could gain center stage again. Adding to the bearish tendency at ICE was Statoil’s announcement that oil production at the Oseberg oil field had been resumed. The site was shut down on Friday after a power blackout had caused a gas leakage. However, G.Oil’s support at 910.00 USD has limited the losses at ICE so far. Oil futures have moved away from their intraday lows by now as the euro and the stock markets are edging higher again.
After oil futures had slumped in early Asian trade on Monday due to the great uncertainty in terms of Cyprus’ bailout, they were trading sideways in a narrow range just above their first support in the course of the morning session. While oil prices at NYMEX and G.Oil at ICE held steady at this level as the euro was also edging higher again towards noon, Brent fell back to its support at 108.00 USD since the North Sea crude is more affected by the Cyprus’ crisis. But this support proved to be strong throughout the day and thus, prices were gradually rising in the early afternoon. At the opening of NYMEX floor trade, oil futures in London and New York slid again to test their supports. This time, WTI also fell below its third support at 91.90 USD. The poor performance of the U.S. stock market, which also smarted under the concerns over Cyprus’ bailout plan, added to the bearish tendency at the oil market. However, about an hour into the New York session oil prices recovered together with the stock market as the euro regained strength when market players had digested the news that the Cypriot government remitted its decision on the bailout package to Tuesday. Market players had simply realized that the whole Cyprus’ crisis might just be a little bit hyped. As a result, oil prices steeply rose at ICE, breaching their first resistance, while WTI even breached several and closed at a 4-week high.
The surprise decision by euro zone leaders to part-fund a bailout of Cyprus by taxing bank deposits sent shockwaves through financial markets on Monday, with shares and the bonds of struggling euro zone governments tumbling. The bloc struck a deal on Saturday to hand Cyprus rescue loans worth 10 billion euros ($13 billion), but defied warnings - including from the European Central Bank - and imposed a levy that would see those with cash in the island's banks lose between 6.75 and 9.9 percent of their money. Parliament in Cyprus put off a vote on the measure - which has shaken depositors' confidence in banks across the continent - until Tuesday, however, and with public anger at the deal widespread the government said it was already looking to ease the pain for small savers. Without the rescue, Cyprus would have be unable to avoid a default. That would have undermined the promise that Greece's debt writedown last year was a one-off, but the unprecedented move to hit depositors adds a radical new dimension to the crisis across the euro zone.
ICE Gasoil contract for April delivery settled at 913.00 USD on Monday. This was 5.00 USD below Friday's settlement. With some 49,400 deals the traded volume was about average.
The indicators at the Brent chart are still not giving off any fresh signals. The Stochastic’s lines are converging and the RSI is still neutral. At the G.Oil chart, however, the RSI could trigger a buying signal in the course of the day if the 30%-line was breached, the more so as the Stochastic is already slightly bullish. Both indicators signal an overbought situation at the WTI chart and thus, analysts expect a small downward correction before the American crude can regain momentum. At ICE, Brent has tested its support at 108.00 USD several times since last week. If this key support was sustainably breached, analysts see more downward potential until around 105.00 USD.
U.S.
Nymex bearish: Despite the slipping dollar and the positive sentiment at the stock market, the oil market has been trading sluggishly this morning, holding steady at yesterday’s closing level. Since the Cypriot government’s vote on the bailout package had been deferred to Tuesday evening, traders’ risk appetite is hampered. The final decision is going to impact the whole banking sector. Trade volume at NYMEX is above average for this time of day. Investors are now waiting for the European market to open, for fresh signals from forex trading and for some economic data to be released today, with the U.S. housing market data being particularly important.
Survey of US Petroleum inventories due out tonight at 21:30(API) and Wednesday at 15:30 (DOE)
Crude oil +1.1; distillates -1.3 ; gasoline -2.1 million barrels vs previous week
Houston (ex-wharf indications 18-03)
380cst $618
180cst $655
MGO $1010
New Orleans (ex-wharf indications 18-03)
380cst $618
180cst $663
MGO $1009
Singapore (correct as of 1430hrs LT - delivered indications)
WTI is bouncing up, surging with +$1.30. Paper for Apr is more cautious, gaining with 180cst 1.25 and for 380cst +$2.25, and May contracts with 180cst +$1.25, 380st +$2.15. The cargo market reacting to the bearish start of the week, losing with 180cst -$4.78, and 380cst -$3.20 and MGO -$0.28.
The Singapore fuel oil market started the week dropping more than -$3.2 during the Platts window yesterday. The Asian Fuel Oil crack continues to firm as supply is getting tighter with lower incoming cargoes. The delivered bunker premiums shot up to range between $7.25 to $9.0 above cargo prices yesterday. This morning markets are trading slightly down.
High premiums for prompt deliveries.
380 cst $628
180 cst $638
MGO $916
Fujairah (delivered indications 19-03)
380cst $642
180cst $685
MGO $1025
ARA (Amsterdam - Rotterdam - Antwerp)
Still delays reported at some terminals in Rotterdam. However due to the lack of demand in ARA in generally, we do not expect any problems on prompt deliveries, even though a higher premum is requested.
Indications for delivered bunkers:
380cst : $ 607
(1.0 %) :$ 620
180cst: $ 638
(1.0 %):$ 655
MGO 0.1%S: $ 905
