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Crude started bullish this morning, with extended gains above $111 a barrel on Monday to a near five-month high as rising tensions over a suspected chemical weapons attack in Syria added to concerns that increased unrest in the Middle East could disrupt supply. Oil prices also gained alongside equities after a steep drop in new U.S. home sales tempered expectations the Federal Reserve will soon reduce stimulus.

The losing euro and stock markets giving off initial gains again are weighing on oil futures now. While WTI’s and G.Oil’s downturn stalled above their second support, Brent has already breached its second limitation at 110.90 USD. Since there is no important economic data on the agenda this morning and many traders in Great Britain may be absent form their desks today due to the bank holiday, oil markets may be guided by technical factors today such as the breach of supports or resistances. In view of increased volatility, oil prices might see some stronger fluctuations in the course of the day. Moreover, the geopolitical tensions in the Middle East could also provide some fresh signals.

Last Friday, oil futures in London and New York started rather calm. Trade volume had been very low and some investors took some small gains in hopes of an improving supply situation. The Kirkuk-Ceyhan pipeline had been put back in service and Libya had announced to re-open its export terminal Begra. In the early afternoon, especially gasoline and distillate contracts surged in view of news from the USA, reporting production outage at the Port Arthur refinery in Texas and the Saint Johne refinery in Canada. The volume of traded gasoline and distillate futures had already been very low because of the front month changes next week. This lead to a technical reaction as market players increasingly shifted their positions to later points of delivery and also placed some short positions in order to back possible supply bottlenecks in the short term. Moreover, the combined effect of fewer-than-expected new home sales in the USA and a positive reading of the EU’s consumer confidence index pushed the euro in the afternoon. Since the rising euro vs. the dollar makes dollar-denominated oil futures more expensive for holders of other currencies, investors increasingly engaged in long positions. Thus, oil prices maintained their firm tendency in late trade and closed at their day’s highs.

ICE Gasoil contract for September delivery settled at 941.75 USD on Friday. This was 5.50 USD below Friday's settlement. With some 42,900 deals the traded volume was far below average.

The Stochastic’s lines have crossed for Brent and G:Oil and thus have given off a buying signal. The indicators is moving above the 50%-line, however, which is why the buying signals does not have as big an effect as if the lines had crossed in overbought territory. But for WTI, the buying signal is clearer and gives rise to a bullish trading session for the American crude. Given that the RSI still hints at an overbought market situation, we consider the technical constellation as neutral to bullish this morning.

U.S.

Nymex gaining: This morning, oil markets have been defending the gains made in late trade Friday, consolidating at a high level.

The traded volume at NYMEX is slightly above average for this time of day. Market players are now waiting for the opening of European markets and for new clues from forex trading. They will also closely eye developments in Middle East and hope for some signals from today’s economic data.

Houston (ex-wharf indications 23-08)
380cst $603
180cst $673
MGO $1014

New Orleans (ex-wharf indications 23-08)
380cst $607
180cst $657
MGO $1016

Singapore

Crude is slighty bearish, with WTI +$1.05. Singapore paper is dropping with -$3.25 for 180cst and -$3.00 for 380cst for Sep, and for Oct 180 cst -$2.50 and 380cst -$2.35 with MGO contracts Sep +$0.27 and Oct +$0.32. The cargo market is mixed with 180cst +$0.49, 380cst -$0.30 and MGO -$0.41.

The Singapore fuel oil markets closed around parity, ranging between -$0.5 to $0.5 during the Asian Platts window last Friday. The Singapore heavy residual stockpile saw a slight decline of -0.32 mbbl to 20.67 mbbl. The delivered bunker premiums were weak at +$1.5 to $2.0 above cargo prices. Bunker fuel oil swap prices gained $1.0- 2.0/mt along the curve for 3.5% Rtdam FOB barges and Sing180 cst papers. Visco spread remains weak with September trading at app. $3/mt and cal14 at app.$7.5/mt. This morning both markets are trading slightly lower.

380cst $607
180cst $610
MGO $920

Fujairah (delivered indications 23-08)

380cst $609
180cst $664
MGO $985

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 : $597
(1.0 %) :$617
180cst: $626
(1.0 %):$ 646
MGO 0.1%S: $ 924