---

Last week's sharp rise in oil futures has prompted investors to take some profits from their long positions today and so oil markets saw a slight retreat this morning. Since the market is somewhat overbought investors also tend to consolidate their riskier long positions at oil markets even though prices did not sustainably fall below support levels at 910.00 dollars Gasoil, 107.00 dollars Brent and 102.85 dollars WTI. At these levels the downside was limited. Moreover, the stochastic indicator does not yet give any clear selling signal - neither at ICE charts, nor at NYMEX charts. The technical situation can thus still be seen as neutral. Analysts say that Libya and Egypt are still two factors that speak against a sharp decline in oil prices, implying that there is rather more upside to oil markets. Morgan Stanley thus expects the price of a barrel of Brent to continue rising through the second half of summer, naming a price band of 110 to 115 dollars. According to Morgan Stanley, it is not only the supply shortages from Libya and Forties or the risk premium (regarding Egypt) that bolster oil markets but also the better state the US economy seems to be in. The latest positive data on the US labour and housing market indicate that the economy in the USA is about to gain some verve.

On Friday morning, it seemed as though last week's price rally had lost some drive. After Egypt's president Mohamed Morsi had been ousted, market participants hoped that the protests and the violence would come to an end and part of the risk premium for oil futures might be priced out. However, Egypts military leadership declared the state of emergency over some parts of the country after an attack on an Egyptian airport. This renewedly boosted oil prices around noon making them soar above several resistance lines. Better than expected US labour market data and the shut-down of the important Libyan export terminal Es Sider additionally bolstered oil markets. Consequently, oil futures at ICE and NYMEX climbed until late in the evening without any sustainable downward correction. While the WTI hit a new 14-month high rising to 103.68 dollars, Brent and Gasoil hit new 3-month highs. The traded volume remained far below average, however.

ICE Gasoil contract for July delivery settled at 911.75 USD on Friday. This was 9.50 USD above Thursday's settlement. With some 25,600 deals the traded volume was clearly below average.

After having given a selling signal on Friday morning, the stochastic indicator has turned neutral again at the WTI chart. At the Brent and the Gasoil charts, indicators are not giving any new signals this morning either. That is why we currently assess the technical situation as rather neutral. Even though the RSI and the stochastic indicator are still in overbought territory, favouring a downward correction, new clues that might trigger such a correction are lacking for the time being - both from the technical as from the fundamental situation.

U.S.

Nymex neutral: After Friday's rally oil futures in London and New York are currently trading in a relatively narrow range on a high level. The WTI is seeing some profit taking as the problems in Libya and Egypt are particularly buoying the European contracts. The traded volume at NYMEX is far above average for this time of day. Market players are now eying the performance of European markets and new clues from forex trading and the scheduled economic data, see economic calendar. Moreover they will keep an eye on Libya and Egypt.

Houston (ex-wharf indications 05-07 )
380cst $590
180cst $675
MGO $995

New Orleans (ex-wharf indications 05-07)
380cst $630
180cst $665
MGO $984

Singapore (correct as of 1430hrs LT - delivered indications)

Crude is surging with +$1.68. The paper market is bullish as well with Jul 180cst +$6.25 and for 380cst +$5.75, and Aug contracts with 180cst +$7.25, 380st +$6.00. The cargo market is starting to react with 180cst -$2.12, and 380cst +$0.12 and MGO +$0.35.

The Singapore fuel oil market lost between -$2.0 to flat during the Asian Platts window last Friday. The Singapore heavy residual inventory saw another draw of -1.47 mbbl to 19.94 mbbl. Despite the draw, there is plenty of still unaccounted product floating in the region. The delivered bunker premiums were ranging between +$5.0 to +$9.0 above cargo prices. This morning Singapore market is trading up.

380cst $598
180cst $606
MGO $910

Fujairah (delivered indications 8-07)

380cst $604
180cst $682
MGO $1050

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $594
(1.0 %) :$608
180cst: $610
(1.0 %):$ 632
MGO 0.1%S: $ 889