Oil futures at ICE and NYMEX had already surged in early Tuesday trading, reacting to the better-than-expected economic data released in the euro zone and Germany. Adding to the oil's upside were rising stock markets and especially the bullish technical constellation since market players tended to place technical buying orders. Thus, oil prices fully unlocked their upward potential during morning trade. In the afternoon, traders then seized the high price level to take profits as U.S. indicators came in better than expected. Although positive data point to economic growth and higher oil consumption, at the same time, it also increases the likelihood that the U.S. Fed might really start tapering its bond purchases soon. Thus, oil markets only briefly retreated and then quickly firmed up again in light of the bullish market situation, i.e. the technical bullish constellation and expectations of a draw in U.S. oil stockpiles. Consequently, oil futures rose once again in the late evening. However, the API inventory data turned out to be rather bearish. But as it did not lead to immediate profit-taking, oil markets closed with substantial gains. It seems as if the Stochastic’s selling signal has been used up by now. Even if the indicator’s lines are not touching yet, they are already converging and thus, the Stochastic oscillator is neutral at the moment. Yesterday, a double top formed at the Brent chart in the area of 110 USD where the North Sea crude had hit its day’s high (110.06 USD). If this formation is not breached to the top, it signals a technical downward correction. So within the next days, Brent might decline to around 106 USD. However, selling signals have been lacking so far and will only arise if the Stochastic’s lines cross. Accordingly, we still consider the technical constellation as neutral this morning.
ICE Gasoil contract for September delivery settled at 927.75 USD on Tuesday. This was 13.50 USD above Monday's settlement. With some 67,400 deals the traded volume was slightly below average.
U.S. refineries continue to cut back on oil production and apparently already see off summer season. Lower refinery runs point to weaker demand and can be regarded as bearish for the oil market. National crude reserves dropped again, though less than expected. Like last week, the decline was predominantly registered in WTI’s storage hub in Cushing, Oklahoma. But without consideration of the draw in Cushing, the remaining crude inventories even slightly increased. Thus, the change in crude reserves may even be considered slightly bearish. In terms of products, the API reported a clear rise, but it was unexpectedly strong. As this is another bearish factor, the overall report was deemed bearish as well. Still, oil markets did not immediately react to the data which had been released last night. Traders may still wait for the DoE’s figures to get more detailed information. Nonetheless, oil markets may see some profit-taking even before the release of the DoE report since some traders might recede from their bullish position.
Whilst the 17-nation currency profited from better than forecast data on the German and the French gross domestic product in the early hours of European trading, it erased its gains until noon. Obviously, market participants had already priced in a slight growth in the euro zone's GDP in the second quarter of 2013, released later in the morning. Although the preliminary data on economic growth in Germany and France had lead to some tests of the euro's resistance at 1.3280 USD, the common currency lost some ground after the data for the euro zone came in. It slumped to its second support at 1.3235 USD, even though the currency bloc's gross domestic product rose by +0.3% in the second quarter ending the recession after six quarters of economic decline. In the first quarter of 2013, the euro zone's GDP fell by -0.3%. Meanwhile, the British Pound was able to make some headway against the dollar as the minutes of the BoE's last meeting were released. The head of the Bank of England, Mark Carney, apparently failed to convince all members of the bank's committee for monetary policy that interest rates should not be raised before the unemployment rate in the U.K. falls to 7%. This spurred speculations over a sooner than expected hike of interest rates. The members of the committee did not agree on a strategy for bond buying either. Technically, the stochastic indicator remains bearish. If the common currency sustainably falls below its support at 1.3235 USD, technical selling pressure might increase. The euro last sold at 1.3247 USD. Supports are at 1,3235 USD, at 1,3230 USD, at 1,32 USD and at 1,3190 USD. Resistances are at 1,3280 USD, at 1,3295 USD and at 1,3315 USD.
US economic indicators:
• Producer price index (yoy) July +2,1%. Forecast: +2,4%; previous month: +2,5%
U.S.
Nymex bearish: In early Asian trading, oil futures have been edging lower. After yesterday's surge, market players are taking profits now, the more so as the API data also came in bearish. The traded volume at NYMEX is only slightly below average for this time of day. Market players are now waiting for European markets to open, for new signals from forex trading as well as for GDP figures out of Germany and the euro zone and the DoE's inventory data at 4.30 p.m.
U.S. refineries continue to cut back on oil production and apparently already see off summer season. Lower refinery runs point to weaker demand and can be regarded as bearish for the oil market. National crude reserves dropped again, though less than expected. Like last week, the decline was predominantly registered in WTI’s storage hub in Cushing, Oklahoma. But without consideration of the draw in Cushing, the remaining crude inventories even slightly increased. Thus, the change in crude reserves may even be considered slightly bearish. In terms of products, the API reported a clear rise, but it was unexpectedly strong. As this is another bearish factor, the overall report was deemed bearish as well. Still, oil markets did not immediately react to the data which had been released last night. Traders may still wait for the DoE’s figures to get more detailed information. Nonetheless, oil markets may see some profit-taking even before the release of the DoE report since some traders might recede from their bullish position.
Houston (ex-wharf indications 13-08)
380cst $599
180cst $670
MGO $1000
New Orleans (ex-wharf indications 13-08)
380cst $597
180cst $645
MGO $1002
Singapore
The Singapore fuel oil markets saw a strong rally of more than +$9.0 during the Asian Platts window yesterday tracking the buoyant crude price movement. Delivered bunker premiums slipped to around +$5.0 as higher outright prices curbed buying interest.
380cst $603
180cst $605
MGO $918
Fujairah (delivered indications 14-08)
380cst $600
180cst $655
MGO $980
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. In September ESSO Antwerp will have even more avail problems as they are working on maintenance of their refinery. Because of this, local Antwerp suppliers will need to buy more product in Rotterdam, therefor long waitinglines at Rotterdam refineries and storage are to be expected, with premiums on price as a result.
Indications for delivered bunkers:
380cst : $603
(1.0 %) :$618
180cst: $634
(1.0 %):$ 648
MGO 0.1%S: $ 903
