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Even though crude oil stocks in Cushing increased last week, this should have been the last builds at the delivery spot for WTI futures so far. The Keystone XL pipeline currently pumps about 300,000 barrels of crude oil per day from Cushing to the US Gulf coast and so oversupplies in the heartlands could steadily wane from now on.

WTI is thus likely to trade higher than Brent in the coming days and weeks. Therefore, the spread between the two benchmark crude oil sorts should already narrow to less than 10 dollars before next week's inventories data (Wednesday). The spread last amounted to about 10.20 dollars. The start of the pipeline has dented the US Gulf coast refinery's demand for imports. On the long run, the thus remaining import quantities can be sold on other markets.

On Thursday morning the slightly bullish fundamentals gained the upper hand at oil markets in London and New York. Whilst ICE futures stayed below their first resistances until the afternoon, futures at NYMEX successively rose already breaching several resistances ahead of the release of the DOE's data on US oil inventories early in the evening. NYMEX Heating Oil and WTI took the lead as investors expected the cold snap to have caused a decline in US distillate stocks and as the start of the southern section of the Keystone XL pipeline on Wednesday had bolstered demand for the US crude oil sort. Whilst economic indicators out of the Euro zone released in the morning came in rather positive, US data released in the afternoon caused some disappointment. In all, they had no larger impact on oil futures however. The news regarding a possible cease-fire in South Sudan had a bearish impact on Brent. Since the country's production hasn't been considerably hampered by the fights so far, there was no sharper decline, however. The DOE's report on US oil inventories released at 5 p.m. was interpreted as bullish given the lower than expected builds in crude oil stocks and the massive draw in distillate inventories. This chiefly impacted futures at NYMEX. WTI thus marked new highs in the evening, whereas Brent rather tended to the downside settling near its lows. The spread between Brent and WTI thus narrowed to about 10.20 dollars.

ICE Gasoil contract for February delivery settled at 922.50 USD on Thursday. This was +3.50 USD above Wednesday's settlement. With some 52,400 deals, the traded volume was slightly below average.

The short-term down trends at ICE and NYMEX were continued yesterday, in part they even steepened. Neither the stochastic indicator, nor the RSI are giving any decisive signals at the moment. They can thus be seen as neutral. WTI has sharply risen over the past three days, gaining about +3.5%. Since the stochastic indicator and the RSI point to an overbought situation, WTI might soon see a downward correction if market participants take profits from their long position in WTI. Technically, the stochastic indicator and the RSI might give selling signals then. These could lead to such a downward correction which might make futures even fall below their short-term uptrends. Since such signals are still lacking and the current uptrend is incact for the time being, we still assess the technical situation as neutral at the moment.

U.S.

Nymex neutral: After traders took some profits from their long positions late Thursday evening, oil futures currently regain some ground. However, this is not due to any news. The traded volume at NYMEX is slightly below average for this time of day. Investors are now looking ahead to the development at stock markets waiting for new cues from forex markets. They will also keep an eye on the situation in Libya, Iraq and South Sudan. As to economic data, there aren't any important indicators due today.

API: Crude oil +4.9; Distillates -2.3; Gasoline +1.1 million barrels vs previous week, refinery utilisation -2.2%; cushing +0.8.
DOE's: Crude oil +1.0; Distillates -3.2; Gasoline +2.1 million barrels vs previous week, refinery utilisation -3.5%; cushing +0.7.
Forecasts: Crude oil +1.7; Distillates -0.5; Gasoline +1.5 million barrels vs previous week.

Houston (ex-wharf indications 24-1)
380cst $593
180cst $679
MGO $977

New Orleans (ex-wharf indications 24-1)
380cst $608
180cst $660
MGO $988

Singapore

WTI is cooling slightly, still climbing with +$0.98. Singapore paper is back on its bearish track with --$3.15 for 180cst and -$0.75 for 380cst for Feb, and for Mar 180 cst -$3.40 and 380cst -$2.25 with MGO contracts slightly bullish Feb +$0.11 and Mar +$0.10. The cargo market is bullish with 180 cst +$2.07, 380cst +$3.82 and MGO -$0.58.

The Singapore fuel oil markets closed app. $3/mt higher during the AsianPlatts window yesterday. The latest Singapore heavy residual inventory saw a draw of -1.08 mbbl to 18.89 mbbl. The delivered bunker premiums were ranging between +$7.0 and +$9.0 above cargo prices. This morning both markets are trading lower.

380cst $616
180cst $629
MGO $920

Fujairah (delivered indications 24-01)

380cst $626
180cst $650
MGO $985

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $564
(1.0 %) : $593
180cst: $594
MGO 0.1%S: $ 880