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Brent crude slipped below $107 a barrel on Thursday after weak Chinese economic data dimmed the outlook for fuel demand in the world's No. 2 oil consumer, and oil output in the United States reached the highest rate in more than two decades. Oil fell for a second day after figures showed China's manufacturing activity hit an 11-month low in July and its job market weakened, raising concerns of slower oil demand growth. At the same time, crude production in top consumer the United States rose to 7.56 million barrels a day, the highest since 1990, according to the U.S. Energy Information Administration. Confirmation of a fall in U.S. oil inventories failed to support prices. Brent crude for September last fell 0.3 percent to stay below $107 a barrel, after settling on Wednesday at its lowest since July 4. US crude dropped by more than 0.8 percent to under $105.

After oil futures at ICE and NYMEX had largely been trading within their trading range Wednesday morning, ICE contracts then started to edge lower towards noon, breaching first supports. Weak economic data out of China which hint at a slowdown in the country’s manufacturing sectors had dampened market sentiment. At this point, WTI could still draw support from expectations of another drop in U.S. crude reserves. Although oil prices only moderately reacted to the bullish DoE report at first, they soon slumped both at ICE and NYMEX. In view of the massive decline the past weeks, investors shrugged off the reported draw in crude which only was slightly stronger than expected. They decided to seize the high price level reached last week to take profits. Besides, the fact that disappointing data released in China Wednesday morning weighed down stock markets and the dollar was also adding to the downward pressure at the oil market in the evening. Consequently, WTI marked its biggest day’s loss in a month, falling to its support at 105.00 USD. So NYMEX crude closed near Wednesday’s low whereas ICE futures could slightly recover in late trade. Still, ICE contracts also settled with some losses.

ICE Gasoil contract for August delivery settled at 914.25 USD on Wednesday. This was 5.50 USD below Tuesday's settlement. With some 36,900 deals, the traded volume was below average

Oil prices at ICE as well as at NYMEX breached the lower limitations of their short-term uptrend channel, triggering a selling signal. Both the RSI and the Stochastic are bearish at all charts this morning. However, the Stochastic is already moving into the oversold zone which may favour a small upward correction. But we still consider the technical constellation as neutral to bearish for the time being.

U.S.

Nymex bearish: Oil prices have been losing more ground in Asian trading this morning. Market players mention profit-taking and the strong decline of Asian stock markets due to disappointing Chinese indicators as reason for oil’s weak performance. The traded volume at NYMEX is far above average for this time of day. Market participants are now looking ahead to the opening of European markets, to new signals from forex trading and to some economic data out of the USA.

Survey: Crude oil -2.5; distillates +1.5; gasoline +1.5 million barrels vs previous week
API: Crude oil -1.4; distillates -0.7; gasoline -0.9 million barrels vs previous week
DOE: Crude oil -2.8; distillates -1.2; gasoline -1.4 million barrels vs previous week

Although the DoE reported a stronger-than-expected drop in crude inventories despite of a lower refinery output, the decline was rather moderate compare to the previous week. With 364.2 million barrel, crude reserves still are at a record level. The fact that product stockpiles decreased can be largely attributed to lower refinery run rates and higher demand for distillates (+0.492 mbpd) and for gasoline (+0.253 mbpd). According to market participants, the reason for refiners to curb production that the peak summer demand is over. An output of 92.3% may still be quite high and demand for oil products also relatively steady, but another reduction and thus, slowing demand are to be expected in the weeks to come. Moreover, U.S. production increased to 7.56 mbpd in the reported week which is is a record level last reached in 1990. The fact that crude stocks in Cushing also dropped again shows that transportation routes to the coast work pretty well but, at the same time, raise concerns that oil supplies could pile up at the Gulf Coast as refinery slow down their production. So in the end, the actually bullish data had a rather bearish effect on oil markets yesterday.

Houston (ex-wharf indications 24-07 )
380cst $587
180cst $670
MGO $1004

New Orleans (ex-wharf indications 24-07)
380cst $590
180cst $635
MGO $1005

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

Crude is bearish with -$2.15. The paper market bullish still, loosing with Aug 180cst -$6.25 and for 380cst -$5.15, and Sept contracts with 180cst -$5.75, 380st -$5.25. The cargo market is mixed with 180cst +$3.19, and 380cst -$0.19 and MGO +$0.13.

The Singapore fuel oil market closed mixed yesterday ranging between -$0.25 to +$3.0 on the Asian Platts window yesterday. The delivered bunker premiums saw a big range between +$2.5 to $6.0 above cargo prices as crude started to soften after the window. This morning markets are trading slightly down.

380cst $599
180cst $602
MGO $910

ARA (Amsterdam - Rotterdam - Antwerp)
Indications for delivered bunkers:
380cst : $595
(1.0 %) :$605
180cst: $624
(1.0 %):$ 631
MGO 0.1%S: $ 886