After consolidating in Asian trading early Monday, oil prices continued to tick lower during the European session. Along with persisting worries about the Fed reducing its expansive measures, investors are increasingly rattled by economic development in China. After the release of yet again disappointing indicators last week, record interest rates at financial markets now fan fears about a financial crisis that would result in sluggish oil demand in the world’s second biggest energy consumer. Oil prices had already tested their first supports during morning trade but due to the lack of follow-up selling orders, they could not be breached sustainably. In further trading, oil futures largely remained range-bound, with ICE contracts being slightly more volatile. WTI slumped to a three-week low and Brent tried several times to crack its 100 USD support. However, oil markets have seemingly not been willing to let this mark be breached. Then in late trade, news on the closing of several Canadian pipelines which transport crude to the USA boosted oil prices as traders seized the chance to engage in long positions again after days of bearish news. Although oil contracts quickly breached several resistances at ICE as well as at NYMEX, the pipeline shut-downs mainly propped up the American crude. The Stochastic’s lines are converging overbought zone at all charts this morning and thus, the indicator is losing its bearish influence, the more so as a buying signal would arise if the two lines crossed. After Brent failed to sustainably breach its key resistance at 100.00 USD yesterday, downward potential is rather limited now. The RSI remains neutral. Yesterday’s late surge had been exclusively caused by fundamentals. As long as the Stochastic’s lines do not cross, we consider the technical constellation as neutral this morning.
ICE Gasoil contract for July delivery settled at 856.75 USD on Monday. This was 1.75 USD below Friday's settlement. With some 57,000 deals, the traded volume was slightly below average.
The Canadian pipeline operator Enbridge shut down a damaged oil pipeline last night which usually transports about 100,000 barrel of crude to the USA each day. Sunday night, around 750 barrel of crude derived from shale leaked out. Moreover, two more pipelines were also closed to be on the safe side. Although the reason for the leakage has not yet been identified, it is presumed that the unusual heavy rain falls, resulting in earthmoving, might have caused the damage. Speakers of Nexen and Suncor, two companies that are involved in the pipeline operations, said that the tar sand production has been shut down due to some problems and it might result in supply bottlenecks. However, it apparently is not threatening the production target set for 2013. But it is not clear at the moment when production can be resumed completely.
Canada as North America’s biggest oil supplier transported about 1.345 million barrel/day to the USA in the week ended 14th of June, accounting for 28% of U.S. oil imports. The country has had several problems with oil leaks and has for a long time attracted criticism on its tar sand production.
In the wake of declining stock markets in Asia and the weak euro, oil futures have been losing some ground early this morning after the Monday’s late rise. Asian markets have fallen to their lowest level since September last year due to concerns over the stability of the Chinese financial system.
The euro slightly retreated against the dollar during Asian trading this morning after having regained some ground in late New York trading yesterday on remarks uttered by two regional Fed presidents. Against the backdrop of the Fed possibly reducing the amount of dollars available on the market, the euro remained pressured. However, the New York Fed chief William Dudley's warning that the Fed needed to keep in mind the state of the financial markets before tapering its expansive measures sent the dollar slightly lower. Market players interpreted his comments as a hint that the US central bank might continue its easy-money policy a little longer. After the common currency had hit yesterday's low at 1.3052 USD, it regained some ground climbing back above 1.3135 USD. The second straight rise in the ifo business climate index has hardly moved the euro, however. According to the expert Ms Meier, the renewed improvement of Germany's most important economic indicator in June was but briefly able to support the common currency. The business climate index had kept track of its rise seen in the preceeding month climbing to105.9 points and nourishing hopes on an economic recovery in the second half of this year. Today, forex traders are eying a string of economic data out of the USA that might give some hints for the Fed's future monetary policy. Technically, the stochastic indicator is neutral at the euro chart. Still, its lines have converged and might give a buying signal if they cross. Both the RSI as well as the stochastic indicator move deeply into oversold territory. This might evoke a short-term counterreaction on the hefty losses the euro marked over the past few days. The euro last changed hands at 1.3143 USD testing its first resistance. Supports are at 1,3085 USD, at 1,3060 USD, at 1,3020 USD, at 1,30 USD and at 1,2920 USD. Resistances are at 1,3145 USD, at 1,3170 USD, at 1,32 USD, at 1,3210 USD, at 1,3255 USD and at 1,33 USD.
U.S.
Nymex bullish: Trade volume at NYMEX is above average for this time of day. Investors are now waiting for the European markets to open, for fresh signals from forex trading as well as for a series of economic indicators to be released in the USA in the course of the day.
Houston (ex-wharf indications 25-06 )
380cst $570
180cst $611
MGO $947
New Orleans (ex-wharf indications 25-06)
380cst $576
180cst $637
MGO $948
Singapore (correct as of 1430hrs LT - delivered indications)
The Singapore fuel oil markets had a sharp correction between -$14.5 to -$11.5 during the Asian Platts window yesterday tracking the weaker crude values. The delivered bunker premiums were lifted higher, app. +$7.5 above cargoes prices as bunker demand firmed.
380cst $589
180cst $606
Fujairah (delivered indications 25-06)
380cst $597
180cst $683
MGO $1015
ARA (Amsterdam - Rotterdam - Antwerp)
Indications for delivered bunkers:
380cst : $577
(1.0 %) :$ 610
180cst: $610
(1.0 %):$ 635
MGO 0.1%S: $ 860
