---

WTI oil futures edged higher this morning, as market players assessed demand prospects from the U.S. and the supply outlook in Iraq.

The technical constellation as well as market fundamentals gave a slightly bearish picture on Monday morning. Market players continued to take profits from the risk premium regarding Iraq as the fighting in the north of the country once again had no negative effects on Iraq's oil output at the weekend. Brent had already breached the important support at 112.80 USD in the morning triggering further technical selling orders. The decline was halted until the early afternoon by the key-support at 112.55 USD but then Brent also dropped below this marker. Investors renewedly focused on cutting the risk premium regarding Iraq yesterday. The marginal rise of Libya's oil output and the reports saying that the rebels in Libya considered restarting procedures at the oil installations in Es Sider from August also weighed on oil prices. Whilst oil futures retreated at the beginning of the week against the backdrop of a neutral to bearish market environment marking considerable losses on Monday evening, the euro surprisingly made some headway. Therefore, there was some downward potential for domestic prices in the eurozone that grew until the late afternoon.

ICE Gasoil contract for July delivery settled at 915.00 USD on Monday, this is -5.75 USD below Friday's settlement. With some 32,500 deals, the traded volume (front month) was below average.

After investors had taken some profits from the risk premium regarding Iraq, oil futures at ICE broke below their technical downtrends yesterday adding to selling pressure. The technical indicators are now suggesting an oversold market, however. This leads to expect that the technical selling pressure has been spent during yesterday's decline. Currently, there are no new cues but the RSI as well as the stochastic indicator might provide bullish cues in the course of the day. The crucial point will be whether the lines of the stochastic indicator sustainably cross and whether the RSI surpasses 30%. For the time being, we (still) assess the technical situation as neutral.

U.S.

Nymex on avarage: Futures at ICE and NYMEX only hit their intraday lows in late trade yesterday evening. This morning they have edged higher supported by uplifting economic data out of China. The traded volume at NYMEX is about on average at this time of day. This Tuesday, market participants will closely eye stock and forex markets and the release of some economic indicators. They also keep monitoring the developments in Iraq and Ukraine and are waiting for the API's data on US oil inventories, due at 10.30 p.m. tonight.

Forecasts: Crude oil -2.5; Distillates +1.0; Gasoline +0.5 million barrels vs previous week.

Houston (ex-wharf indications 1-7)
380cst $610
180cst $681
MGO $989

New Orleans (ex-wharf indications 1-7)
380cst $617
180cst $660
MGO $997

Singapore (delivered indications 1-7)

WTI is up with +$0.66. Singapore paper is down with -$0.90 for 180cst and -$0.25 for 380cst for Jul, and Singapore paper is up for Aug 180 cst +$0.10 and 380cst with +$0.10 with MGO contracts being bullish in Jul with +$0.27 and in Aug with +$0.24. The cargo market is bearish with 180cst -$1.43, 380cst with -$1.48 and MGO with -$1.17.

The Singapore fuel oil prices extended losses by another $3.5-1.5 during the Asian Platts window yesterday in line with lower crude values. The Singapore physical fuel oil market remained relatively firm and premiums kept more than +$1.0/mt.

380cst $610
180cst $630
MGO $912

Fujairah (delivered indications 1-7)

380cst $620
180cst $648
MGO $987

ARA (Amsterdam - Rotterdam - Antwerp)

380cst : $595
(1.0 %) : $631
180cst: $635
MGO 0.1%S: $882