Given that first supports stood firm during morning trade Wednesday, oil markets in London and New York advanced towards noon, buoyed by European stock markets. In this phase, the slightly bullish technical constellation had favoured the rise in oil prices which was, however, limited by Brent’s strong resistance at 101.60 USD. Market players were frequently taking profits at this level as a first estimate of the U.S. GDP had come out worse than expected and, at the same time, traders were still waiting for the DoE inventory data to be released in the late afternoon. These turned out clearly bearish and drove oil prices down to new lows in a minimum of time. But the price delince was short-lived. Apparently, some investors seized to low price level to engage in long positions with regard to the Fed’s monetary policy. The reason is that the rather disappointing GDP lets to believe that the Fed might not start tapering its bond purchases as soon as announced. Thanks to their late upturn, oil futures settled stronger and have also made some gains early this morning. The Stochastic’s lines have clearly crossed at the Brent chart this morning which backs up the buying signals triggered for WTI and G.Oil yesterday. The RSI still is neutral and only slightly indicates an oversold situation for Brent. The technical constellation is currently favouring a further advance in prices and thus, we consider the technical analysis as bullish today. After yesterday’s late gains, oil futures also continue to advance in early trading this morning, supported by Asian stock markets (Nikkei 225) as well as by the technical constellation which is still bullish.
ICE Gasoil contract for July delivery settled at 863.75 USD on Wednesday. This was 7.75 USD above Tuesday's settlement. With some 51,400 deals the traded volume was about average.
In the midst of the summer season, gasoline stockpiles have significantly increased. This comes at a point in time, when the EIA expects gasoline demand to fall short of the previous year's levels by some 0.8%. According to Citi Futures Perspective analyst Tim Evans, who also expects demand to remain lower as motors become increasingly energy efficient, the US market is clearly oversupplied. The disappointing data regarding the US GDP in the first quarter stoked new hopes that the Fed might stick to its bond buying program a little longer than Ben Bernanke announced last week. Analysts at BNP Paribas say that this is a slightly bullish component which at the same time makes markets more unpredictable and volatile. The Fed's monetary policy still causes insecurity among market players who hold speculative positions. The US economic indicators that are due to be released today and tomorrow will bring a lot more of equally important data that might give oil markets a new direction. Even though weaker than expected data are bearish, as they indicate a slower economic growth. However, at the same time they might buoy oil futures if they feed market players' hopes on a longer duration of the Fed's accommodative monetary policy. The analyst Jim Ritterbusch at Ritterbusch & Associates expects that, due to this ambiguity, the indicators will not be leading to any larger price jumps this week. Against the backdrop of the more bearish market fundamentals he rather sees some potential for a "speculative liquidation" of long positions.
The European common currency climbed above the psychological marker at 1.30 USD early Thursday as EU finance ministers had agreed on a how to rescue troubled banks and on forcing loses on creditors, shareholders and investors in failed banks. This way, the EU lifted the burden of paying for bank rescue from taxpayers. Now that this issue has been resolved, the euro can advance accordingly since planning security is quite helpful when it comes to assess potential risks. After the 17-nation currency had suffered from Bernanke’s announcement to start tapering expansive measures already this year as well as from Draghi’s remarks to maintain the ECB’s accommodative monetary policy in the euro zone, the euro is now back above 1.30 USD. However, analysts see the shared currency rather weak in the medium term since economic growth in this part of the world is clearly lagging behind the USA’s and the Fed will cut down on its bond purchases earlier than the euro zone’s central bank. “At this point, there is no reason to hold euro shares,” says Ken JHakubzak of KMJ Capital. But the strong slump the past days also favours some short-coverings now if the Stochastic gives off a buying signal. The RSI as well as the Stochastic are still at the oversold level, favouring a technical upward correction. But today and tomorrow, investors will closely watch a series of important U.S. indicators. The euro last sold at 1.3031 USD. Resistances are at 1.3035 USD, at 1.3055 USD, at 1.3070 USD, at 1.3090 USD, at 1.31 USD, at 1.3125 USD, at 1.3145 USD and at 1.3150 USD. Supports are seen at 1.30 USD, at 1.2985 USD, at 1.959 USD, at 1.2949 USD and at 1.29 USD.
German economic indicators:
• Unemployment rate May 6,8%. Forecast: 6,9%; previous month: 6,8%
• Employment change May -12.000. Forecast: +8.000; previous month: +17.000
U.S.
Nymex bullish: The traded volume at NYMEX is about average for this time of day. Market players are now closely watching the performance of European markets, new cues from forex trading and some economic data to be released in the course of the day.
US oil inventories
At higher refinery runs, the DoE reported a small build in crude and a comparatively higher rise in gasoline stockpiles. The figures in detail:
Although the build in crude inventories was only marginal, it was far higher than expected as analysts had forecast a slight drop of 2.0 mbpd. Moreover, product stocks also increased more than expected, benefiting from higher refinery runs, on the one hand, and by surging imports (+0.882 mbpd vs. previous week) on the other hand. Even if import figures cushion gasoline’s bearish effect, the DoE data as a whole is to be considered bearish.
Houston (ex-wharf indications 27-06 )
380cst $564
180cst $606
MGO $941
New Orleans (ex-wharf indications 27-06)
380cst $569
180cst $630
MGO $943
Singapore (correct as of 1430hrs LT - delivered indications)
The Singapore fuel oil markets fell between -$10.0 to -$5.0 during the Asian Platts window yesterday. There seems to be some slowing buying momentum on the 180cst cargoes. The delivered bunker premiums were around $7.5 above cargo prices.
380cst $582
180cst $596
MGO $880
Fujairah (delivered indications 27-06)
380cst $590
180cst $673
MGO $1020
ARA (Amsterdam - Rotterdam - Antwerp)
Indications for delivered bunkers:
380cst : $574
(1.0 %) :$ 602
180cst: $602
(1.0 %):$ 627
MGO 0.1%S: $ 857
