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Brent oil futures slumped to a five-week low this morning, as worries over potential supply disruptions in the Middle East continued to subside.

Oil markets in London and New York already kept track of their losses on Wednesday morning. Futures soon broke below Tuesday's lows increasing the technical selling pressure and generating more downward potential. Particularly news on Libya weighed on prices. After force majeure on Libyan oil ports Es Sider and Ras Lanuf had been lifted, production at Libya's largest oil field Sharara was resumed. Production at the field even increased more quickly than expected. Even though it showed relatively early that prices would continue declining, traders were still waiting for new cues from the DOE's data on US oil inventories, that was due at 4.30 p.m. in the afternoon. Although the DOE's report was considered largely bearish, it also contained bullish factors and so, the downward move folowing the release of the data initially came to a halt. Investors rather took profits from the short positions (short-covering) they had raised in the past few days. In the course of the evening, the bearish tendency prevailed, weighing particularly on crude oil futures (Brent and WTI), which hit new lows. Gasoil consolidated sideways, however. On the one hand, figures on distillate stocks in the USA came in rather bullish limiting the downward potential. On the other hand, the front month Gasoil contract with July delivery is going to expire this afternoon. Traders thus shift their riskier positions from this contract to the one due in August (and later this year) covering their short positions, resp. avoiding new positions.

ICE Gasoil contract for July delivery settled at 883.00 USD on Wednesday, this is -4.50 USD below Tuesday's settlement. With some 24,700 deals the traded volume (front month) was below average.

Oil futures have declined for days and the technical indicators (stochastic indicator and RSI) are in deeply oversold territory. Still, they don't give any fresh signals. The stochastic indicator could only give a bullish signal in this situation. However, the lines of the indicator needed to significantly cross. At the Gasoil chart, this is currently appearing to be the case but the front month of the contract is going to switch from July to August delivery today. Since traders remain cautious, the contract due in July hasn't been traded yet this morning. Therefore, we won't consider this impact in our technical analysis for the time being. Like in the past few days, the technical constellation thus remains neutral. If the lines of the stochastic indicator sustainably cross, a bullish correction might be triggered. If oil futures fall clearly below yesterday's lows, however, there is more downward potential. The technical constellation would then indicate that the steep downtrend oil futures showed in the past few weeks continues.

U.S.

Nymex below avarage: Oil futures at ICE and NYMEX consolidated near Wednesday's lows in the early morning. Meanwhile they have edged lower as the euro lost some ground as well. The traded volume at NYMEX is above average for this time of day. Traders will eye stock and forex markets today monitoring the developments in Iraq, Ukraine, Iran and Libya. After a relatively calm week, investors will today look ahead to the release of data on the US jobs market (weekly) that might at least bring some new cues.

Forecasts: Crude oil -2.8; Distillates +1.0; Gasoline -0.5 million barrels vs previous week.
DOE: Crude oil -2.4; Distillates +0.2; Gasoline +0.6 million barrels vs previous week.
API: Crude oil -1.7; Distillates -0.5; Gasoline +0.1 million barrels vs previous week.

Houston (ex-wharf indications 10-7)
380cst $591
180cst $676
MGO $981

New Orleans (ex-wharf indications 10-7)
380cst $600
180cst $654
MGO $979

Singapore (delivered indications 10-7)

WTI is down with -$1.61. Singapore paper is up with +$2.25 for 180cst and +$1.00 for 380cst for Jul, and for Aug 180 cst +$1.15 and 380cst with +$0.75 with MGO contracts being bearish in Jul with -$0.25 and in Aug with -$0.20. The cargo market is bearish with 180cst -$2.38, 380cst with -$2.91 and MGO with -$1.20.

The Singapore fuel oil prices dropped nearly $3.0 during the Asian Platts window yesterday. The delivered bunker premiums remained unchanged at around $5.0 above cargo. The recent weakening in outright bunker prices following the general downtrend in crude values are expected to attract firmer demand.

380cst $590
180cst $605
MGO $885

Fujairah (delivered indications 10-7)

380cst $596
180cst $630
MGO $975

ARA (Amsterdam - Rotterdam - Antwerp)

380cst : $574
(1.0 %) : $614
180cst: $614
MGO 0.1%S: $861