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After declining for two straight days, oil prices recouped this morning. While easing supply fears from Libya eased oil markets yesterday, new concerns about supply disruptions in in the Middle East undercut oil advance again today. At first, however, crude futures fell below their first support at 108.35 USD (Brent) and at 106.25 USD (WTI) at the opening of European markets, pressured by the bearish technical constellation. But as the next one proved to be strong, they bounced off and surged above their second resistance at 109.00 USD (Brent) and at 107.00 USD (WTI). Moreover, positive figures on industrial production in Italy and Great Britain as well as a better-than-expected GDP forecast for Italy pushed the euro, and thus, oil futures above their resistances. The data raises traders’ hopes for stronger demand in the euro zone. Adding to the bullish potential were rising tensions in the Middle East and the prospect of another draw in U.S. oil inventories. Violent conflicts at the Heglig oil field in Sudan threaten the already fragile cease-fire between the Sudan and South Sudan. Furthermore, U.S. oil inventories are expected to have declined again, according to first estimations. Now investors eagerly await the API report tonight and of course, the DoE data tomorrow. Left on the agenda today are the U.S. trade balance and U.S. retails sales, which could influence market development in the afternoon. Upward potential is currently limited by the euro’s advance.

Given that oil futures had lost considerable ground after disappointing U.S. jobs data on Friday, they could slightly recover in early trading Monday. Thanks to positive indicators out of China, oil prices at ICE and NYMEX were already testing their first resistance during morning trade, which proved strong, however, and slowed down oil’s rise. Shortly afterwards, both oil markets saw a selling wave, the more so as oil exports from Libya could be partly resumed. This raises concerns again that demand growth might not keep pace with oil supply. Moreover, the fact that the dollar firmed up against the euro also weighed on oil prices at this point. After first supports had been breached, technical selling orders reinforced the downward pressure. Only with the release of a better-than-expected ISM services PMI in the USA did oil futures erase some of their losses. With a reading of 56.0 points in July, the index stood at the highest level in five months. ICE Gasoil contract for August delivery settled at 920.25 USD on Monday. This was 3.50 USD below Friday's settlement. With some 29,000 deals the traded volume was far below average.

The Stochastic oscillator gave off a selling signal yesterday as its both lines crossed at all charts. Thus, the indicator is still bearish this morning. The RSI is still in the neutral zone and is to remain there without any fresh signals for the time being. However, the indicator slightly hints at an overbought market situation which favours more profit-taking. But most analysts expect oil prices to consolidate at their current level this morning. Consequently, we assume a neutral to bearish stance at the moment. If, however, oil futures fell below yesterday’s lows, more selling orders would be triggered.

U.S.

Nymex bearish: After recovering in late trade yesterday, oil prices have been losing ground again in early Asian trading this morning due to profit-taking. The traded volume at NYMEX is about average for this time of day. Market players are now eying the performance of European markets, new clues from forex trading, a few economic data out of the Germany and the USA, see economic calendar, as well as for the EIA report and the weekly inventory data by the API.

Survey of US Petroleum inventories due out tonight at 22:30(API) and Thursday at 17:00(DOE)
Crude oil -1.1; distillates -0.4; gasoline -0.5 million barrels vs previous week.

Houston (ex-wharf indications 05-08 )
380cst $586
180cst $668
MGO $1010

New Orleans (ex-wharf indications 05-08)
380cst $593
180cst $637
MGO $1012

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

The Singapore fuel oil markets gained between +$1.0 to +$3.0 on the Platts window yesterday and the Visc Spread narrowed to a year-low at only 0.17 spot. The delivered bunker premiums were ranging between $3.5 to $6.5 above cargo prices yesterday as crude prices weakened after the window.

380cst $602
180cst $604
MGO $915

ARA (Amsterdam - Rotterdam - Antwerp)

Due to the availability problems with hsfo ( long waiting time at refineries, only contracts with some ex wharf suppliers, less spot available at higher premiums) the spread between hsfo and lsfo is minimum.

Indications for delivered bunkers:
380cst : $608
(1.0 %) :$614
180cst: $637
(1.0 %):$ 640
MGO 0.1%S: $ 895