The euro edged higher in Asian trading but still remained below the 1.29 USD marker. The fact that Eurogroup chief Jeroen Dijsselbloem has in part qualified his remarks has kept the common currency in check. Yesterday, Dijsselbloem stated that the type of bailout for Cyprus might serve as a template for other indebted euro zone members. Later in the evening, he qualified these remarks by saying that the agreement for Cyprus was "customized" and thus should be regarded as a "special case". However, market players now expect that future bailout packages might weigh more strongly on the private creditors. On the long run, this will rather put pressure on the euro, and downward pressure on crude prices.
Oil prices showed a steady tendency during Asian trading on Monday, testing their first resistance lines at ICE and NYMEX at the beginning of the European session. Initially, these resistances remained strong, however. Market sentiment improved after the Cypriot government and its creditors had agreed on a bailout package of some 10 billion euros, which also stoked hopes that European oil demand might increase. At that point in time, the euro traded above 1.30 USD but did not give any new buying signals to investors on the oil market. Only when the traded volume increased in the first hours of New York trading surpassed the Brent its key-resistance at 108.40 dollars despite the retreating euro. As expected, this has triggered further technical buying orders which ebbed near the Brent's strong resistance at 108.95 dollars and the WTI's strong resistance at 95.50 dollars. Given the sharply declining euro/dollar-parity, the counter reaction was just as significant. Remarks made by the chief of the Eurogroup, Jeroen Dijsselbloem, according to which the levy on bank deposits like the one in Cyprus might also be necessary in other indebted countries, have dragged the 17-nation currency back below the 1.29 USD marker. Oil futures at ICE even hit new intraday lows. The WTI's losses were but moderate. Since the southern US refineries' access to the country's crude oil has improved, market participants still cut spreadbets and so the spread between the Brent and the WTI has narrowed to 13.20 dollars. This was the lowest level since July 2012. In late US trade, oil prices were able to recover as traders seized the low level to raise their long positions. Both at ICE and at NYMEX, oil futures thus settled with moderate gains.
ICE Gasoil contract for April delivery settled at 900.75 USD on Monday. This was 2.25 USD above Friday's settlement. With some 48,300 deals the traded volume was on average.
The stochastic indicator gave a buying signal at the Gasoil chart yesterday, after it had already given such a signal at the WTI and the Brent charts. This signal was fostered by the RSI which surpassed the 30% line. Brent was able to breach its resistance line at 108.40 dollars and the WTI briefly exceeded the important 95.00 dollars marker, creating more upward slack, see also technical analysis. Since the stochastic indicator still recommends "buying" at the WTI and the Brent charts this morning, we assess the technical constellation as rather bullish. However, traders will focus on the economic data due to be released this week making the technical constellation shift into the background.
U.S.
Nymex gaining: After yesterday's hefty losses, oil futures have edged higher in Asian trading this morning. Still they don't show any vaster oscillations for the time being. Currently, there are no new clues from stock and forex markets. The traded volume at NYMEX is below average for this time of day. Market players now look ahead to the performance of European markets and new cues from forex trading. Today, there are also some economic indicators out of the euro zone and the USA on the agenda. Investors will also closely watch the data on US oil stockpiles from the API (tonight) and the DOE (tomorrow).
Crude oil stockpiles in Cushing have dropped to 49 million barrels last week - the lowest level since mid-December. In January, they had hit a record high of 51.9 million barrels, as the transport capacity of the Seaway pipeline had to be throttled. Then, the spread between the WTI and the Brent had increased to more than 23 dollars. This was some 10 dollars higher than the current spread. JBC Energy analysts say that the spread might even narrow to 11 dollars, if only for a short period of time. As soon as the spread narrows to less than 15 dollars, oil transports by railway are no longer profitable. In this case it is cheaper for refineries to import the needed crude oil.
Survey of US Petroleum inventories due out tonight at 21:30 (API) and Wednesday at 15:30 (DOE).
Crude oil + 0.8; distillates -1.1; gaoline -1.2 million barrels vs previous week.
Houston (ex-wharf indications 25-03)
380cst $615
180cst $657
MGO $986
New Orleans (ex-wharf indications 25-03)
380cst $613
180cst $655
MGO $995
Singapore (correct as of 1430hrs LT - delivered indications)
WTI is slowing, but gaining still with +$0.98. Paper for Apr is turning bearish with 180cst -$0.50 and for 380cst -$0.05, and May contracts with 180cst -$0.50, 380st -$0.05. The cargo market is starting to react to the bullish start of the week gaining ifo 380 with 180cst +$2.48, and 380cst +$3.26 and MGO +$0.29.
The Singapore Fuel Oil Market rose more than +$2.5 during the Platts window yesterday. The Asian Fuel Oil cracks were weaker than expected on stronger selling pressure. The delivered bunker premiums were higher, ranging between $7.75 to $8.5 above cargo prices as crude prices remain supported after the window.
High premiums for prompt deliveries.
380 cst $621
180 cst $627
MGO $900
Fujairah (delivered indications 26-03)
380cst $629
180cst $678
MGO $1015
ARA (Amsterdam - Rotterdam - Antwerp)
In Rotterdam and Antwerp, some suppliers reduced premiums for the delivered LSFO fuel oil grades as supplier tanks were full of products. Barge avails are better then beginning of the week.
Indications for delivered bunkers:
380cst : $ 604
(1.0 %) :$ 622
180cst: $ 630
(1.0 %):$ 655
MGO 0.1%S: $ 888
