Brent crude held steady above $112 a barrel on Wednesday, while the U.S. benchmark rose more than $1 to a five-week high after news of the scheduled start of a key pipeline that was expected to relieve a glut at the country's main oil storage hub. U.S. oil built on a more than $2 jump in the previous session, after transcanada Corp said it would begin operations at its Keystone XL pipeline on Jan. 3. The launch will allow rising inventories at the Cushing, Oklahoma oil hub to move to the U.S. Gulf Coast, where a large share of the country's refining capacity is concentrated. Brent crude for January delivery was 7 cents lower at $112.58 a barrel at 0748 GMT, after settling $1.17 higher in the previous session. US crude was up $1.07 at $97.11 a barrel, after settling up $2.22 on Tuesday.
ICE Gasoil contract for December delivery settled at 945.75 USD on Tuesday. This was 3.00 USD above Monday's settlement. With some 45,700 deals, the traded volume was far below average.
Oil futures at ICE and NYMEX consolidated on a high level Tuesday morning with a slight downward tendency. However, the rather bullish market fundamentals prevented a larger decline making oil futures change direction in the course of the afternoon. WTI was additionally fostered by experts' forecast of the first draw in US crude oil stocks in 11weeks. After submission deadline, there were also reports saying that the next segment of the Seaway Pipeline is to be started on January 3. Then, refineries in the US Gulf region will have a better access to WTI stocks at Cushing, Oklahoma, which are slightly cheaper. Along with the API's data on US oil inventories, this supported the price of WTI in late trade leading to a narrowing of the Brent-WTI-spread to some 15.70 USD. According to the API, crude oil stockpiles accross the USA have seen a sharp decline of 12,4 million barrels. This is far more than experts had expected.
The lines of the stochastic indicator crossed at ICE charts this morning giving a buying signal, see also technical analysis. Meanwhile, the RSI keeps hovering above 70%. Thus we assess the technical situation as bullish at ICE charts this morning. It indicates further tests of the upward potential.
U.S.
Nymex bullish: After yesterday's sharp rise, oil futures are currently consolidating next to their settlement levels showing no clear direction. The traded NYMEX volume is far above average for this time of day. Investors are now looking ahead to the development at European markets, new signals from forex trading and cues from today's economic indicators. They are also waiting for the DOE's data on US oil inventories, due at 4.30 p.m. and news regarding the OPEC's regular meeting in Vienna.
While refinery run rates significantly increased last week, crude oil and gasoline stockpiles in the USA declined. Distillate inventories have shown moderate builds. The figures of the API in detail:
Survey: 03.12. crude oil -0,7; distillate -1,2; gasoline +1,3 vs million barrels previous week.
API: 03.12. crude oil -12,4; distillate +0,5; gasoline -0,1 vs million barrels previous week.
Refineries increasingly step up production - on the one hand in order to raise the currently low product stocks and to respond to winter demand, on the other hand in order to reduce crude oil inventories ahead of the reporting dates at year's end. Since refinery run rates significantly increased last week, US crude oil inventories have dropped. With a sharp decline of 12.4 million barrels, crude oil stocks have sunk far more than experts had expected. Even though total crude oil stocks still are near their record highs hit in May and June, the draw in crude oil inventories pushed the price of WTI higher as it prompted investors to take profits from their spreadbets and cover their short positions in WTI.
Product stocks have shown a less dramatic change, according to the API's report. There has been a slight draw in gasoline inventories. Since demand for gasoline is weaker in winter, investors focus on the change in distillate stocks, however. In this category, the API's figures showed surprise builds that had a bearish impact on prices.
According to the massive draw in crude oil stocks, the bullish impact prevailed at oil markets last night making WTI futures rise, in particular. Moreover, the spread between WTI and Brent narrowed.
Houston (ex-wharf indications 02-12)
380cst $594
180cst $669
MGO $984
New Orleans (ex-wharf indications 02-12)
380cst $614
180cst $649
MGO $988
Singapore
Crude is bullish with WTI +3.20. Singapore paper is bearish with -$1.25 for 180cst and -$0.25 for 380cst for Dec, and for Jan 180 cst +$0.25 and 380cst +$0.00 with MGO contracts Dec +$0.67 and Jan +$0.65. The cargo market is mixed with 180 cst +$0.16 380cst -$0.58 and MGO +$0.31.
The Singapore fuel oil markets were pretty flat yesterday, ranging between -$0.50 and +$0.25 during the Asian Platts window. There were strong sellers yesterday on the cargo market with aggressive offers as premiums slid to parity. The delivered bunker premiums were seen app. +$7.0 above cargo prices yesterday. This morning markets are trading slightly lower.
380cst $603
180cst $608
MGO $950
Fujairah (delivered indications 04-12)
380cst $621
180cst $667
MGO $1030
ARA (Amsterdam - Rotterdam - Antwerp)
A lot of operational problems in both Rotterdam and Antwerp. Many suppliers only possible to offer from 06/12 onwards for 380 lsfo.
Indications for delivered bunkers:
380cst : $585
(1.0 %) : $638
180cst: $625
MGO 0.1%S: $ 917
