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Brent Crude held just above Tuesday’s low of 108.55. Resistance at 109.70/75 did just hold a move higher but as stated yesterday, shorts need stops above 109.95 for a selling opportunity at 110.30/40, with stops above 110.80. Today’s outlook remains quite negative so watch support at 108.55/45. Failure here targets support at 108.05/00 which could hold the downside but below here meets 200 day moving average support at 107.60/40.

Weekly Outlook: Support now at 110.60 then 109.20. Next target is 108.10/00. Above 112.20 can target 113.00 highs last week. A break higher targets 114.28.

ICE Gasoil contract for December delivery settled at 932.00 USD on Wednesday. This was +4.00 USD above Tuesday's settlement. With some 22,300 deals, the traded volume was far below average.

After having briefly recovered on Wednesday morning, oil futures at ICE edged lower breaching first short-term supports. Even though the EIA and the IEA, according to there monthly energy reports, expect that oil demand will rise, both agencies forecast that supplies will increase at a quicker pace than demand, which would add to the oversupplied market situation next year and would dent demand for OPEC oil. Tuesday's news saying that the blockades at oil export terminals in the east Libya would soon be ended also weighed on oil prices. Since important economic indicators and other fundamental data were lacking on Wednesday, investors renewedly focused on the data on US oil inventories. Spreadbets already considerably increased volatility at oil markets ahead of the release of the DOE's report. However, market players struggled to draw clear hints from the DOE's figures as crude oil inventories across the USA significantly declined whereas crude oil stocks in Cushing slightly increased. Distillate and gasoline stocks also showed massive builds. Moreover, the figures are skewed due to seasonal draw in crude inventories. At last, the bearish cue provided by the builds in Cushing crude oil stockpiles prevailed for WTI. Since investors raised their spreadbets they took but few profits from product contracts and Brent - despite a bearish product demand and change in (product) stocks. WTI thus finished Wednesday's session marking significant losses whereas ICE futures remained strong. Consequently, the spread between WTI and Brent widened to more than 12 dollars.

The lines of the stochastic indicator have crossed at the Brent chart giving a buying signal and thus providing some technical support for the North Sea crude oil contract. At the Gasoil chart there is currently no signal to confirm this and at the WTI chart, the indicator is bearish. Given the buying signal at the Brent chart, we assess the technical constellation at ICE as slightly bullish this morning. However, this bullish note might easily wane if there is no buying signal at the Gasoil chart and if Brent remains below yesterday's highs.

U.S.

Nymex neutral: Brent ticked slightly higher this morning fostered by a technical buying signal but still gains remain limited. The other contracts have hardly changed. The traded NYMEX volume is slightly below average for this time of day. Investors are looking ahead to the opening of European stock and forex markets. Moreover, they look ahead to the release of some economic indicators.

US oil inventories

While refinery run rates increased last week, according to the DOE, US crude oil stocks declined. Product inventories have shown massive builds, however.

Even though refinery utilisation in the USA only slightly increased last week, US crude oil stockpiles showed a massive draw. The reason for this draw is not only the rise in refinery throughput but also the decline in imports. In the reported week, crude oil imports in the USA shrank by -0.9 million barrels. Consequently, the 7.2 million barrel draw in crude oil stocks at the US Gulf coast constitutes the major part of the total draw in crude oil inventories.

Demand for distillates (-0.2 mbpd) and gasoline (-0.5 mbpd) significantly decreased. This development and the fact that refineries have stepped up production lead to builds of stockpiles in these categories.

Houston (ex-wharf indications 10-12)
380cst $597
180cst $670

New Orleans (ex-wharf indications 10-12)
380cst $617
180cst $652
MGO $991

Singapore

WTI is loosing with -$0.94. Singapore paper is gaining with +$1.50 for 180cst and +$1.25 for 380cst for Dec, and for Jan 180 cst +$1.50 and 380cst +$1.25 with MGO contracts Dec +$0.25 and Jan +$0.45. The cargo market is bullish with 180 cst +$1.50, 380cst +$1.25 and MGO +$0.45.

The firming market was reflected in the Singapore 180cst fuel oil paper market, which saw the balance Dec/Jan timespread flip to a backwardation Tuesday from a contango of 25c/mt the previous day. LSFO market in Singapore looks still to be well supported by thermal power generation in Taiwan and Japan and this would probably continue into January as well. This morning both markets are trading higher.

380cst $606
180cst $613
MGO $940

Fujairah (delivered indications 12-12)

380cst $626
180cst $672
MGO $1020

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $582
(1.0 %) : $620
180cst: $612
MGO 0.1%S: $ 900