Oil market development is still determined by the Syrian conflict. Oil prices continued to rally early this morning before Brent and G.Oil bounced off their first resistances at 980.00 USD and at 117.35 USD, respectively. Traders apparently seized the high price level to take some profits from long positions placed yesterday, causing oil price to drop back to their first support. The USA has announced to provide proof of the Syrian government’s responsibility for the use of chemical weapons. Thus, experts expect preparations for a military strike to be at the final stage and to be able to be effected within the next days. A speaker of the Obama Administration said that there was no final decision on a military intervention yet. In view of oil’s surge yesterday, market players have drastically raised the risk premium and hedge against potential bottlenecks by placing long positions. The risk premium seems appropriate at the moment which may be the reason for investors to take some profits from long positions during morning trade. If further hints at a military intervention were given, for example if the British parliament granted a mandate, oil markets would see more upside.
Iran’s religious leader warns of a military intervention by the USA. As is well known, Iran is a close ally of the Syrian president Assad et is said to have provided its troops with weaponry in the past. Now that the speculations over a military strike by the USA increase, ayatollah Ali Chamenei warns that this would lead to a catastrophe for the region. “The region is a loose cannon whose trajectory is unpredictable” if the West gears into the conflict. Chamenei holds the highest political and religious rank and as commander in chief of the armed forces, he is de facto the head of state.
After the Summer Bank Holiday in Britain on Monday, oil markets starter softer Tuesday morning, waiting for fresh signals. When the USA had struck fiercer tone towards the Assad regime, traders felt compelled to place new long positions already around noon. Given the use of chemical weapons in Syria, a military intervention by the West seems to be only a matter of time. Consequently, traders increasingly liquidated their speculative short positions whereas producers stock up on future crude supplies by engaging in new long positions in order to be prepared for potential bottlenecks. As a result, oil futures easily breached several resistances, followed by technical buying orders which accelerated the upturn at ICE and NYMEX. This also caused calculated domestic prices to surge yesterday afternoon. Now the price rally seems hard to stop and oil prices have continued to climb throughout the night. Brent and G.Oil rose to new 6-months highs while WTI even reached its highest level since May 2011.
ICE Gasoil contract for September delivery settled at 961.75 USD on Tuesday. This was 21.50 USD above Monday's settlement. With some 44,200 deals the traded volume was slightly below average.
The Stochastic oscillator is still slightly bullish but the buying signal already dates a few days back. The RSI is back above the 70%-line at the Brent and G.Oil chart. Yesterday, WTI climbed above its key-resistance at 108 USD. If it had not breached this marker, it would have led to a downward movement and so technical stop-loss buyings were triggered. Thus, we consider the technical constellation as slightly bullish today since technical selling signal are not to be expected today. Moreover, the technical analysis may play a minor role today in view of the Syrian conflict.
U.S.
Nymex gaining: The price rally continues at the oil market, with oil prices climbing to new highs. The Syria issue is dominating market development. The traded volume at NYMEX is about four times higher than usual 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 today’s economic indicators, especially the DoE data. They will also continue to closely eye developments surrounding Syria.
Survey: Crude oil +0,7; distillates +0,5; gasoline -1,3 vs million barrels previous week
API: Crude oil +2.5; distillates unchanged; gasoline -1.1 million barrels vs previous week
DOE: Due out tonight
Houston (ex-wharf indications 27-08)
380cst $618
180cst $689
MGO $1028
New Orleans (ex-wharf indications 27-08)
380cst $622
180cst $672
MGO $1030
Singapore
Crude is surging with WTI +$3.75. Singapore paper is bullish as well with +$11.75 for 180cst and +$10.00 for 380cst for Sep, and for Oct 180 cst +$11.75 and 380cst +$10.75 with MGO contracts Sep +$4.16 and Oct +$4.11. The cargo market is slowly tracking crude and paper with 180cst +$0.76, 380cst -$0.09 and MGO +$0.13.
The Singapore fuel oil markets settled between flat to +$0.75 during the Asian Platts window. The delivered bunker premiums remained weak at +$0.25 to $1.5 above cargo prices as demand was muted. The Asian Fuel Oil cracks stayed weak as fuel oil values lagged behind the stronger crude movements. Bunker fuel oil swaps gained up to $8/mt at the front of the forward curve. Backend was weaker with Cal14 papers assessed app.$5/mt and Cal15 only some $3/mt. This morning markets are trading higher.
380cst $617
180cst $622
MGO $950
Fujairah (delivered indications 28-08)
380cst $619
180cst $677
MGO $1015
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.
LSFO can be a problem in Antwerp at the moment. The largest storage of total does not have enough product at the moment. This should be solved by end of this week.
Indications for delivered bunkers:
380cst : $608
(1.0 %) :$628
180cst: $637
(1.0 %):$ 658
MGO 0.1%S: $ 956
