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WTI oil futures traded near a two-month low this morning, as market players assessed demand prospects from the U.S. and the supply outlook in the Middle East.

After Friday's sharp losses, the downward potential at oil markets in London and New York seemed spent and so, futures at ICE and NYMEX initially stabilized on Monday morning. The situation in Libya supported prices as, with renewed fighting in Tripoli and the occupation of the export terminal in Brega, doubts flared up again on whether the situation in the country is really that stable that a noticeable increase in oil production in the coming weeks can indeed be expected. Oil futures were additionally fostered by short covering. That is why they breached first short-term supports in the early afternoon. Since the problems regarding Libyan and Near East oil supplies particularly buoyed the futures at ICE, WTI remained comparatively weak only keeping track of the steadier tendency in late evening trade. Apart from this, there were reports on renewed heavy fighting in Iraq. Still, the combats are far from the oil installations in the south of the country. As to the nuke talks with Iran in Vienna, there were new cues on Monday. This morning, however, reports said that there is progress in the talks.

ICE Gasoil contract for August delivery settled at 883.25 USD on Monday, this is -1.00 USD above Friday's settlement. With some 56,100 deals the traded volume (front month) was on average.

The technical indicators at ICE charts are neutral this morning. Whilst the RSI is staying below 30%, the lines of the stochastic indicator are touching at the Brent and the Gasoil charts running in parallels. A new selling signal will only be triggered if the lines significantly cross, like they are currently doing at the WTI chart. Thus, the indicator is at least bearish at the US crude oil chart, favouring tests of the downside. The resistances of the steep downtrend remain intact still preventing a possible rise. Along with the selling signal at the WTI chart, our merely technical assessment is thus slightly bearish. However, Brent's and WTI's lows on Monday, resp. Gasoil's low on Friday are still limiting the downside. If the stochastic indicator at the ICE charts confirms the selling signal at the WTI chart, technical selling pressure would increase sending oil futures below the lows mentioned above. The upward potential will depend on whether the mid-term resistances stay strong or not and/or whether the RSI surpasses 30%. If it does so, a buying signal would be generated that might lead to a technical counter reaction. Due to the intact resistance line and the selling signal at the WTI chart, we are currently assessing the technical situation as neutral to bearish, however.

U.S.

Nymex above avarage: This morning, oil futures stayed in a rather narrow range consolidating near Monday's settlement levels. At the moment, they are edging lower, however. The traded volume at NYMEX is slightly below average for this time of day. Investors will monitor stock and forex markets today keeping a close eye on the developments in Iraq, Ukraine and Libya. They will also wait for news on the nuke talks with Iran and today's economic indicators.

Forecasts: Crude oil -2.5; Distillates +2.0; Gasoline +0.9 million barrels vs previous week.

Houston (ex-wharf indications 15-7)
380cst $588
180cst $686
MGO $977

New Orleans (ex-wharf indications 15-7)
380cst $592
180cst $649
MGO $978

Singapore (delivered indications 15-7)

WTI is neutral with +$0.24. Singapore paper is up with x$0.00 for 180cst and +$0.50 for 380cst for Jul, and down for Aug 180 cst -$1.00 and 380cst with -$0.50 with MGO contracts being bullish in Jul with +$0.05 and in Aug with +$0.05. The cargo market is bearish with 180cst -$4.74, 380cst with -$2.62 and MGO with -$.0.48.

The Singapore fuel oil prices closed Friday seeing another round of gains by +$2.0 to +$3.0 during the Asian Platts window. The Singapore heavy residual inventory report saw a draw of -2.31 mbbl to 20.89 mbbl. The delivered bunker premiums were up slightly, seen at around +$6.0 above cargo prices. The morning Singapore fuel oil values started indicatively stronger with a considerably narrowing of the Asian crack.

380cst $590
180cst $608
MGO $883

Fujairah (delivered indications 15-7)

380cst $605
180cst $635
MGO $985

ARA (Amsterdam - Rotterdam - Antwerp)

380cst : $573
(1.0 %) : $607
180cst: $613
MGO 0.1%S: $858