---

WTI oil futures declined on Wednesday, as investors awaited the release of weekly supply data out of the U.S. later in the session to gauge the strength of oil demand from the world’s largest consumer.

Futures at ICE and NYMEX started with a steadier tendency on Tuesday morning keeping track of the slightly bullish market fundamentals. Prices were particularly buoyed by investors' expectations of new sanctions from the EU against Russia and by the bullish survey on US oil inventories that showed a renewed draw in US crude oil stocks. Moreover, the August WTI front month contract expired yesterday evening and so spreadbets as well as the fact that market players adjusted their positions rendered the contract more volatile. The reopening of the Libyan oil port in Brega didn't have any major impact on oil prices as exports from Libya are still on a low level and as the country's total oil output has renewedly been cut due to full storage capacities. After oil prices had sharply risen until Tuesday afternoon, they increasingly shed their gains in late trade. Market players started to take some profits from their long positions. The weaker euro favoured this decline. In the course of the evening, the foreign ministers of the EU announced that there wouldn't be any new sanctions against Russia, yet, and that they would only decide on such measures on Thursday. Moreover, the API's data on US oil stocks came in bearish compared to the survey. This also dampened the bullish sentiment at oil markets. Eventually, oil futures even breached their first supports settling with some losses.

ICE Gasoil contract for August delivery settled at 882.50 USD on Tuesday, this is +3.00 USD above Monday's settlement. With some 73,600 deals the traded volume (front month) was above average.

The RSI still in neutral territory at all charts giving no fresh cues for oil markets. The stochastic indicator has already turned bearish at the Brent, the Gasoil and the WTI chart, however, as its lines have sustainably crossed. Thus, the indicator points to another test of the downside. At the Brent chart, strong support has formed near 106.75 and 106.80 USD. Near this level, profit taking is limited. If Brent sustainably breaks below this level, however, there will be more downward potential that might lead to a technical downward correction. Given the selling signals of the stochastic indicator at the ICE and NYMEX charts, we are assessing the technical constellation as bearish this morning.

U.S.

Nymex on avarage: Even though oil futures pulled back from yesterday evening's lows in electronic trading this morning, they are still struggling to find a clear direction. The slight rise is rather due to some short-covering. The traded volume at NYMEX is on average for this time of day. Investors will eye the release of the DOE's data at 4.30 p.m. this afternoon, as well as the development at stock and forex markets today. They will also keep an eye on the situation in Iraq, Ukraine, Israel and Libya and on the economic indicators that are due today.

API: Crude oil -0.6; Distillates +2.5; Gasoline +3.6 million barrels vs previous week.
Forecasts: Crude oil -2.8; Distillates +2.0; Gasoline +1.0 million barrels vs previous week.

Houston (ex-wharf indications 23-7)
380cst $590
180cst $671
MGO $971

New Orleans (ex-wharf indications 23-7)
380cst $597
180cst $669

Singapore (delivered indications 23-7)

WTI is down with -$1.07. Singapore paper is down with -$4.25 for 180cst and -$3.45 for 380cst for Aug, and for Sep 180 cst -$4.45 and 380cst with -$4.05 with MGO contracts being bearish in Aug with -$0.67 and in Sep with -$0.70. The cargo market is bullish with 180cst +$3.93, 380cst with +$3.55 and MGO with +$0.68.

The Singapore fuel oil prices gained more than $3.5 during the Asian Platts window yesterday. The delivered bunker premiums were stronger at around +$9.0-8.0 above cargo yesterday. The Singapore market was said to be tight on supply due to terminal congestion.

380cst $592
180cst $602
MGO $880

Fujairah (delivered indications 23-7)

380cst $608
180cst $639
MGO $985