Oil futures had been slightly declining during morning trade on Tuesday in view of soft euro and falling stock markets. Although first short-term supports had been breached, a sustainable advance failed to materialize since the Stochastic and the RSI did not give off a selling signal. In U.S. trade, oil markets finally pushed higher. Even though U.S. economic figures came out worse-than-expected, they stoked expectations that the Fed will maintain its loose monetary policy during the FOMC meeting which ends tonight. Consequently, investors increasingly engaged in long position after the U.S. data. As a result, oil futures at ICE and NYMEX breached their first resistances. However, they were not able to reach Monday’s highs as traders rather focused on consolidating their positions ahead of the press conference following the FOMC meeting. Accordingly, the trade volume also was slightly below average. Oil prices then settled close to their day’s highs and were able to defend the gains made in the afternoon, despite some profit-taking.
The Stochastic oscillator remains neutral today. Its lines have converged in the overbought zone and could trigger a technical selling signal in the course of the day if they crossed. In addition, the RSI also still indicates an overbought market situation and might give off a bearish signal if it fell below the 70%-line. Until then, however, selling signals are lacking and thus, the technical constellation is rather neutral this morning. We also want to point out that the FOMC meeting will be at the centre of traders’ attention today and as a result, the technical analysis will play a minor role.
ICE Gasoil contract for June delivery settled at 892.75 USD on Tuesday. This was 1.25 USD below Monday's settlement. With some 35,000 deals the traded volume was clearly below average.
After yesterday’s late surge, oil prices have returned from their highs this morning. But as it is just a slight downward correction, the oil market remains at a high level. The traded volume at NYMEX is slightly below average for this time of day. Market players are now eying the performance of European markets and fresh signals from forex trading. As there are no important economic indicators on the agenda, traders may entirely focus on the DoE report at 4.30 p.m.
The chairman of the oil and gas committee of the Iraqi parliament, Adnan Janabi, demanded that Iraq must market its oil more aggressively and also highlighted the challenges of the coming years, posed by unconventional drilling methods such as shale oil and gas extraction. If demand growth really remains below expectations, it will entail considerable risks for sales opportunities. Thus, it is necessary to continue to closely watch oil markets while raising production capacities. For Janabi, a more aggressive marketing strategy also involves oil’s classification into different qualities. Moreover, it would be important to increasingly advance in the refiner sector by means of joint ventures in order to be able to not only sell crude but also refined products. In addition, Janabi wants to increase oil production capacities to extent that reserve capacities can be created in order to obtain some flexibility. Capacities are to increase from 9 to 13 mbpd until 2020.
Last week, the state-owned oil company of Libya, National Oil Co. communicated that the country’s oil production had dropped to below one million barrel a day. According to the deputy oil minister, Omar Shakmak, the situation has stabilized and the oil output has increased again. On Sunday, production already stood at 1.3 mbpd again.
After a shut-down on Monday due to an incident, oil production at the Oseberg field has partly been resumed, says the operating company Statoil. The production halt resulted from the triggering of a gas alarm. The operator has not provided any information on the causes and to what extend production is hampered.
In light of the better-than-expected ZEW data for the euro zone and Germany yesterday morning and rather disappointing figures released in the USA in the afternoon, the European common currency managed to hit fresh 4-month highs and thus continued its uptrend against the dollar.Since mid-May, the euro has gained about 4.6% against the greenback, which is also pressured by the yen. Investors and analysts will closely listen to what central bankers are saying or not saying during the FOMC meeting which ends tonight at 8 p.m. Generally, everyone expects the Fed to not make any changes to its monetary policy in the short-term, given the patchy data released the past weeks and the IMF’s warnings regarding global economic growth. So interest rate are to remain at their ultra-low level and the Fed is to keep up its bond purchases worth 85 billion dollar a month. “In view of recent U.S. figures, Bernanke is likely to say that little has changed since last month and that the Fed will be happy to continue Quantitative Easing”, says Stan Shamu of IG, summing up the current market sentiment. Thus, market players may already have priced in the expectation that the Fed will not reduce its expansive measures. But it will be decisive if Bernanke provides some clues of when to expect the tapering bond buyings to start. Presumably, his remarks will remain vague and he will not name a concrete date or month. This way, the Fed leaves the door open. The technical view does not show any fresh signals. The RSI as well as the Stochastic are moving in the overbought zone and could give off a selling signal if the black line clearly fell below the red one (Stochastic), or if the RSI breached the 70%-line top-down. The euro last sold at 1.3391 USD. Supports are at 1.3380 USD, at 1.3365 USD, at 1.3340 USD, at 1.3330 USD and at 1.33 USD. Resistances are at 1.3415 USD, at 1.3425 USD, at 1.3435 USD and at 1.3445 USD. Unlike at stock and oil markets, forex traders seem to have already priced in the expectations regarding the FOMC decision. As a result, the European common currency stayed within its relatively tight range between their first support and first resistance. All eyes are on central bankers now, the more so as there are no economic data to be released in the afternoon. With the opening of U.S. trade, the euro might receive some fresh signals. But until then, the 17-nation currency may remain range-bound as technical signals are also lacking. The euro last sold at 1.3388 USD. Supports are at 1.3380 USD, at 1.3365 USD, at 1.3340 USD, at 1.3330 USD and at 1.33 USD. Resistances are at 1.3415 USD, at 1.3425 USD, at 1.3435 USD and at 1.3445 USD.
U.S.
Nymex neutral to bullish: As fundamental news are lacking today, oil futures at ICE and NYMEX have surged towards noon, breaching their first resistances. In the run-up to the Fed’s decision on its future monetary policy, investors become increasingly nervous although the majority is not expecting a reduction in expansive measures just yet, which has a bullish effect on the oil market. It seems that if you have to take a risk, it is engaging in long positions. The Fed’s decision is expected to be bullish for oil and thus, currently props up the price level, together with the gains at European stock markets. But since oil’s rise is not based on fundamentals, the gains might not be sustainable. Due to thin news and the lack of important indicators, market players already eye the DoE inventory data, which will be released in the afternoon, before centering their attention on the FOMC again in the evening. Traders will be vigilant about how Ben Bernanke assess economic development in the USA and how he comments on the Fed’s future monetary path, particularly focusing on a time schedule for an exit strategy that allows for a gradual reduction of the bond purchases
After refinery runs had declined in the previous week, the output was higher last week, according to the API. Consequently, crude inventories in Cushing as well as in the whole country dropped and thus may potentially be a bullish factor for the oil market. The build in gasoline stockpiles is rather bearish, however. In all, the API figures are to be regarded as neutral and thus may not make a considerable impact at the oil market in London and New York.
Houston (ex-wharf indications 19-06 )
380cst $594
180cst $680
MGO $967
New Orleans (ex-wharf indications 19-06)
380cst $597
180cst $682
MGO $970
Singapore (correct as of 1430hrs LT - delivered indications)
The Singapore fuel oil markets were assessed app.$3.5/mt down during the Asian Platts window yesterday. Demand was said to be better on lower outright 380cst prices. The delivered bunker premiums were seen around $7.25-6.50/mt above cargoes prices.
380cst $612
180cst $620
MGO $900
Fujairah (delivered indications 19-06)
380cst $620
180cst $697
MGO $1040
ARA (Amsterdam - Rotterdam - Antwerp)
In Rotterdam, below average demand for bunkers was attributed to higher bunker fuel prices with both buyers and suppliers alike suspicious that the current strength in prices might be temporary and caused in part loadings delays that continued to hinder prompt bunker fuel deliveries, A premium of up to $10/ mt over Fob 3.5% Rotterdam barges had been attached for earlier date deliveries. According to bunker sources, buyers were more interested in contract prices then spot as it created more stability in prices and certainty in delivery dates.
Indications for delivered bunkers:
380cst : $598
(1.0 %) :$ 628
180cst: $ 623
(1.0 %):$ 658
MGO 0.1%S: $ 885
