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Oil rose to around $108 a barrel on Wednesday, recovering from a three-month low, on hopes the United States would continue with its stimulus programme and that the European Union would reach a last-minute deal to bail out Cyprus. Cypriot leaders were holding talks in Nicosia after parliament on Tuesday rejected the terms of a European Union bailout. The finance minister, in Moscow trying to secure a loan agreement, said he had not reached a deal on financing with his Russian counterpart. Brent crude for May rose 58 cents to $108.03 a barrel by 1022 GMT after a near 2 percent drop to a three-month low in the previous session. U.S. crude for April was up 52 cents to $92.68.

Oil futures started with a soft tendency Tuesday morning and tested their downward potential early on. As the technical constellation was rather neutral, selling pressure may have arisen from the fundamental situation. The fact that production at the Oseberg oil field had been resumed especially weighed on ICE prices. Adding to this bearish market sentiment was, of course, the Cyprus crisis, which also spread to U.S. markets in the afternoon. Market players were waiting for the Cypriot parliament to vote on the extra levy on bank deposits as a condition of the proposed bailout package. Since the vote had been adjourned several times, it loomed ahead in the late afternoon that Cyprus might not yield a majority in favour for the levy. As a result, selling pressure on the euro and at the stock market abated, which also caused losses at the oil market. When several supports were breached in the evening, the selling pressure on oil futures increased and thus, Brent (107.35 USD) and G.Oil (892.75 USD) marked their lowest level this year. G.Oil even hit was a 8-month low. The Brent/WTI spread for may contracts narrowed to almost 15 USD, the smallest since July last year.

ICE Gasoil contract for March delivery settled at 900.00 USD on Tuesday. This was 13.00 USD below Monday's settlement. With some 64,200 deals the traded volume was above average.

The Stochastic’s lines have clearly crossed at the Brent and WTI chart, giving off a selling signal. The Stochastic’s lines at the G.Oil chart are also about to cross. However, the signal is not as distinct as for the two crude benchmarks. Moreover, the RSI is bearish for WTI after it fell below the 70%-line. Oil futures hit new lows in their steep downward correction yesterday, which favours an upward correction now. Traders may tend to short coverings particularly during morning trade. WTI changes its front month tonight which will increase market volatility. This neutralizes the bearish tendency of the technical constellation and thus, we assume a rather neutral stance this morning.

U.S.

Nymex bullish: After yesterday’s price slump, oil futures are slightly correcting upwards this morning. The stronger tendency may result from short coverings as the stock and forex market are not giving off any signals to give direction so far. The traded volume at NYMEX is below average for this time of day. Investors are now waiting for the European markets to open, for new cues from forex trading and for the upcoming economic indicators.

DOE: due out tonight
Survey : Crude oil +1.1; distillates -1.3 ; gasoline -2.1 million barrels vs previous week.
API : Crude oil -0.4; distillates -1.3 ; gasoline +2.4 million barrels vs previous week.

Houston (ex-wharf indications 19-03)
380cst $617
180cst $658
MGO $999

New Orleans (ex-wharf indications 19-03)
380cst $622
180cst $666
MGO $990

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

WTI is dropping, with -$1.54. Paper is following, dropping with 180cst -9.15 and for 380cst -$6.75, and May contracts with 180cst -$9.15, 380st -$6.75. The cargo market is waiting on economical indicators, therefor stays neutral to bullish, with 180cst +$0.49, and 380cst +$2.57 and MGO +$0.03.

The Singapore fuel oil market was slightly higher yesterday, up by +$0.5 to +$2.5 during the Platts window. Strong demand for bunker grade 380cst lifted the 380cst cargo premium to about $3.5/mt. The delivered bunker premiums were ranging between $4.75 to $7.0 above cargo prices. This morning the markets are trading down.

High premiums for prompt deliveries.
380 cst $622
180 cst $628
MGO $901

Fujairah (delivered indications 20-03)

380cst $630
180cst $680
MGO $1015

ARA (Amsterdam - Rotterdam - Antwerp)

High availability of product at refineries, although the avails for barges are still a problem due to waiting times. Therefore higher premiums for prompt deliveries can still be expected.

Indications for delivered bunkers:
380cst : $ 603
(1.0 %) :$ 618
180cst: $ 633
(1.0 %):$ 648
MGO 0.1%S: $ 890