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Oil futures had been edging lower in early trading this morning but bounced off their supports at 102.20 USD (Brent) and at 94.45 USD (WTI) at the opening of European markets. As a result, oil prices gained considerable ground, buoyed by a rally in global stock market and the rising euro, despite the unexpected build in U.S. crude stocks reported by the API and the bearish energy reports. Following OPEC and the EIA, the International Energy Agency also released its monthly energy outlook this morning, communicating a decline in oil consumption in 2013 and modest economic growth which may prevent oil demand from picking up worldwide. The fact that oil supply is to outstrip demand in the coming month may continue to weigh down oil prices. Although investors see a bear market at the moment, downward potential did not suffice today to eclipse the IEA’s small but bullish warning of potential supply strains due to higher oil processing by refineries in the second quarter of 2013 (+2.2 mbpj compared to the previous quarter). This has generated some upside and following a technical reaction after the rebound, oil futures climbed up, breaching several resistances towards noon. In the afternoon, traders’ attention will turn to the weekly DoE inventory data. If these were to confirm the build in crude reserves as reported by the API, selling pressure would increase again at the oil market.

Oil futures had already been trading down Tuesday morning after technical selling signals had been triggered at the Brent and G.Oil chart, breaching first supports at the opening of European markets. Adding to the selling pressure was the bearish outlook for U.S. oil inventories and later also OPEC’s monthly energy report, revising down its growth forecast and holding a pessimistic view of demand development. Only at WTI’s and Brent’s supports at 94.00 USD and 102.00 USD, respectively, did selling pressure decrease. Thus, oil prices consolidated at a low level in further trading. When the EIA report was released later in the evening, the signals were rather mixed and not regard as clearly bearish. While the stronger euro vs. the dollar favoured short coverings in this phase, U.S. inventory data released by the API at night lead to fresh sell-offs. In the end, oil futures settled clearly in the red.

ICE Gasoil contract for June delivery settled at 858.50 USD on Tuesday. This was 10.75 USD below Monday's settlement. With some 36,000 deals the traded volume was far below average.

OPEC had already warned of downward risks yesterday, which could make a negative impact on oil demand growth in the second half of the year. The EIA may have revised up its oil demand forecast a bit, but still expects global supply to outpace demand growth in light of increasing production of many non-OPEC countries.

The Stochastic gave off selling signals at ICE as well as at NYMEX charts yesterday. Since May, Brent has been struggling to climb above 105 to 106 USD, several tests were followed by technical selling signals at the Stochastic, which lead to a significant downturn, sometimes even below 100 USD. After Brent has again failed to overcome the 105 USD-hurdle, yesterday’s selling signals favour the current downward correction now.

U.S.

Nymex bullish: In view of the Stochastic’s selling signals yesterday and the bearish API report at night, oil futures are currently pointing down.The traded volume at NYMEX is far below average for this time of day. Market players are now waiting for European markets to open and for fresh signals from forex trading as there are no important economic data on the agenda today.

API: Crude oil + 0,9 ; distillates +0,2 ; gasoline + 1,0 million barrels vs previous week.
DOE: Due out tonight.
Survey: Crude oil +0.5; distillates +0.9; gasoline +0.5 million barrels vs previous week.

Houston (ex-wharf indications 11-06 )
380cst $577
180cst $643
MGO $953
New Orleans (ex-wharf indications 11-06)
380cst $586
180cst $632
MGO $955

Singapore (correct as of 14:30hrs LT - delivered indications)

Crude is losing still with -$0.41. The paper market is starting to turn with June 180cst +$2.50 and for 380cst -$2.50, and July contracts with 180cst -$0.45, 380st -$2.65. The cargo market is slightly bullish with 180cst +$2.70, and 380cst -$0.10 and MGO +$0.15.

The Singapore fuel oil markets were lifted from flat to +$2.5 during the morning Platts window yesterday. The 180 cst cargo market continued to be bid up strongly by Glencore and BP while the 380cst market remained pale in comparison. The delivered bunker premiums were around +$6.0 above cargoes prices. This morning markets are trading up.

380cst $598
180cst $621
MGO $875

Fujairah (delivered indications 12-06)

380cst $606
180cst $688
MGO $1015