---

The price of oil fell sharply on Monday, to below $102 a barrel, amid concerns that U.S. political leaders might not be able to reach a deal on a federal budget needed to avoid a partial shutdown of the government. By early afternoon in Europe, the benchmark oil contract for November delivery was down $1.36 to $101.51 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 16 cents to close at $102.87 a barrel on Friday. On Friday, oil markets had started hardly changed compared to Thursday's settlement, not showing any movement for quite some time. Thus, Friday's session remained relatively calm as guiding signals are lacking and most investors wanted to wait and see how the U.S. budget debate developed over the weekend. However, market sentiment had stayed bearish and thus, oil markets saw some profit-taking in the afternoon. After Brent and WTI bounced off their strong supports, oil futures began to surge. But in the evening, the upturn turned out to be short-lived and so traders seized the price increase in late trade for renewed profit-taking from long positions. Consequently, oil contracts at ICE and NYMEX closed with losses. This Monday morning, oil markets have been edging lower again, with WTI hitting a fresh 7-week low. Weighing factors at the start of the week are the worse-than-expected HSBC PMI released in China, which signals that the country's economic growth may not be strong enough to significantly boost oil demand, as well as the looming government shutdown in the USA. If Democrats and Republicans failed to reach a compromise, state authorities and public institution would face widespread closures, starting tomorrow.

ICE Gasoil contract for October delivery settled at 927.25 USD on Friday. This was 6.75 USD above Thursday's settlement. With some 46,700 deals, the traded volume below average.

The Stochastic is losing its bullish effect for G.Oil as its both lines are converging again. At the Brent chart, however, the lines are about to to cross, which hints at a soft tendency, while the indicator is still neutral for WTI. The RSI also still is in neutral territory. Given that the Stochastic oscillators has not given off a distinct signal yet, we consider the technical constellation neutral for the time being. WTI has already fallen below 102.00 USD and thus, to a 7-week low. Brent is still trading softer but has not yet reached last week's low. The support at 107.40 USD may be key today. If this marker was sustainably breached, it would lead to a technical selling signal.

U.S.

Nymex easing: In view of the U.S. budget debate and disappointing Chinese figures, oil futures at ICE and NYMEX have been pointing down this morning. The traded volume at NYMEX is clearly above average for this time of day. Market players are now waiting for the European markets to open, for new signals from forex trading and today's economic indicators. Traders will also keep an eye on the budget stand-off in the USA.

Houston (ex-wharf indications 27-09)
380cst $615
180cst $682
MGO $1008

New Orleans (ex-wharf indications 27-09)
380cst $618
180cst $655
MGO $1011

Singapore

Crude is bearish with WTI -$0.84. Singapore paper is going down again with -$2.45 for 180cst and -$2.50 for 380cst for Oct, and for Nov 180 cst -$3.35 and 380cst -$3.00 with MGO contracts Oct -$1.05 and Nov -$1.14. The cargo market is turning with 180cst +$5.91, 380cst +$5.37.

The Singapore fuel oil markets rose app. $5.0 during the Platts window last Friday. The Singapore heavy residual stockpile saw a draw of -0.77 mbbl to 21.79 mbbl, drawing for the second consecutive week. The delivered bunker premiums remained firm at around $4.0 above cargo prices. This morning both markets are trading significantly lower.

380cst $612
180cst $615
MGO $900

Fujairah (delivered indications 30-09)

380cst $613
180cst $671
MGO $970

ARA (Amsterdam - Rotterdam - Antwerp)

In September (starting week 4) ESSO Antwerp will start 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. KPC, an other hsfo refinery in Rotterdam is out on maintenace for 4 months. Waiting times are noted for over 1 week at some storages.

Indications for delivered bunkers:
380cst : $593
(1.0 %) :$607
180cst: $623
(1.0 %):$ 637
MGO 0.1%S: $ 890