As expected, the Stochastic gave off a buying signal yesterday after its both lines had crossed at the Brent and the G.Oil chart. In addition, the RSI climbed over the 30%-line at the Brent chart. Although the stochastic indicator also remains bullish for WTI, the contract is not oversold anymore. In light of the Stochastic's signals, we consider the technical orientaion as bullish this morning. However, much of the bullish potential may have already been used up during yesterday's surge. Thus, a downward correction might follow at first.
Oil prices at ICE and NYMEX started with a stronger tendency Monday morning, breaching their first resistances early on. The RSI had breached the 30%-line bottom-up at the Brent chart and gave off a buying signal. However, the resistances at 108.00 USD (Brent), at 920.75 USD (G.Oil) and at 98.05 USD (WTI) proved to be strong at first. Only with the release of better-than-expected economic indicators in the USA in the afternoon did oil futures surpass these limitations, resulting in more technical buying orders. In this phase, renewed unrest in Libya and Iraq especially bolstered ICE Brent, whereas NYMEX futures drew support from news saying that production at the Citgo refinery in Illinois might be marred longer than expected. ICE futures and NYMEX Heating Oil consequently settled at their day's highs, with Brent reaching a one-week- high. WTI, however, had lost some ground again in late trade.
ICE Gasoil contract for November delivery settled at 925.75 USD on Monday. This was 16.00 USD above Friday's settlement. With some 44,100 deals, the traded volume was below average.
The persisting political turmoil in Libya and Iraq has caused oil production to drop by 3.0 mbpd due to unforeseen disruptions. This is the biggest loss since August. In Libya, oil workers are striking again at export terminals. This may have lead to a decline of 250,000 bpd in crude exports, the lowest level in six weeks, according to Reuters. The country usually exports around 1.0 mbpd. In May, Libya's production still stood at 1.4 mbpd.
On the weekend, several car bombs detonated in Baghdad, Iraq, leaving more than 60 people dead. The news has again fueled supply fears and thus increased the risk premium on oil.
According to Helima Croft, analyst at Barclays Bank, Saudi Arabia’s reserve capacities are declining due to production outages in Libya. The country’s production stands at a historic high above 10 mbpd, which reduces reserve capacities and thus the means to absorb supply shocks elsewhere. "Two of the most volatile oil producers - Libya and Iraq - experienced serious unrest over the weekend, and we think there is a high risk that the security problems could grow more acute and affect output in both countries," Ms. Croft says. The Sharara oil field in the country's south-west was shut downat the weekend after desert nomads had threatened oil facilities, according to Repsol. They demand, among others, Libyan citizenship, which they had been refused before.
JP Morgan raises its forecasts for global oil demand growth by 90,000 bpd for 2013 and by 140,000 bpd for 2014. "This brings total expected demand growth to 850,000 bpd and 910,000 bpd," respectively, the bank says in its weekly note. JP Morgan considers the impact of the U.S. government shutdown on oil demand as rather temporary. Moreover, Chinese oil demand will remain steady and is going to compensate sluggish demand in Europe and Japan. China’s demand is to increase by 400,000 bpd in 2013 and by 360,000 bpd in 2014. In addition, the surging oil production in the USA and Brazil will more than make up for shortfalls in supplies from Libya, Syria and Sudan.
The European common currency is still being guided by the bearish technical constellation after the Stochastic had already delivered a selling signal on Monday. The overbought market situation also favours some profit-taking and takes away most of the upward potential.The RSI is still moving above the 70%-line and thus has no effect yet. If the indicator fell below this line, however, it would provide another selling signal and increase the downward pressure once more. So far, there have not been any fresh fundamentals today. Traders are waiting for new cues from U.S. indicators in the afternoon before focusing on the FOMC meeting in the evening. The euro last sold at 1.3758 USD. Supports are at 1.3775 USD, at 1.3765 USD and at 1.3740 USD. Resistances are at 1.3815 USD, at 1.3835 USD, at 1.3850 USD and at 1.3865 USD.
• Retail sales September -0,1%. Forecast: +0,1%; previous month: +0,2%
• Producer price index (yoy) September +0,3%. Forecast: +0,6%; previous month: +1,4%
U.S.
Nymex bullish: Despite geopolitical tensions and the bullish technical constellation, oil futures in London and New York have been edging lower this morning in view of a stronger dollar vs. the euro. The strong price increase seen yesterday allows for some profit taking.
Houston (ex-wharf indications 29-10)
380cst $613
180cst $668
MGO $987
New Orleans (ex-wharf indications 29-10)
380cst $610
180cst $665
MGO $990
Singapore
Crude is still in bullish territory with the geopolitical tensions threatening supply with WTI +$0.56. Singapore paper is gaining still with +$5.25 for 180cst and +$5.90 for 380cst for Nov, and for Dec 180 cst +$5.50 and 380cst +$6.00 with MGO contracts Nov +$1.80 and Dec +$1.65. The cargo market is not yet responding, losing with 180cst -$2.56, 380cst -$6.09, mgo -1.15
The Singapore fuel oil markets rose app.$3.0 during the Asian Platts window yesterday tracking the firmer crude values. The Asian fuel oil cracks came off as fuel oil values lags behind the crude prices. The delivered bunker premiums strengthen to +$11.0 above cargo prices.
380cst $618
180cst $627
MGO $936
ARA (Amsterdam - Rotterdam - Antwerp)
Indications for delivered bunkers:
380cst : $585
(1.0 %) :$598
180cst: $616
(1.0 %):$ 628
MGO 0.1%S: $ 895
