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WTI oil futures fell sharply this morning, as market participants awaited the release of weekly supply data out of the U.S. later in the day to gauge the strength of oil demand from the world’s largest consumer.

Oil futures at ICE and NYMEX have already retreated on Wednesday morning keeping track of the bearish technical constellation. The buying signals of the stochastic indicator at the Gasoil chart and the RSI at the WTI chart favored the decline. In the course of the morning, the RSI also gave a selling signal at the Brent chart. Since there were no further technical selling signals in the afternoon and news were few, the strong supports at 61 USD Brent and 52 USD WTI limited losses. Market players weighed the temporarily bullish cues (the decline in Iraqi and Libyan exports) for Brent against the bearish cues (builds in US crude oil stocks). The rebound from the strong supports caused a brief recovery at the beginning of US trade but oil futures tended to the downside again in the evening as the technical constellation still weighed on prices. Oil futures' break below 61 USD, 52 USD respectively, generated further selling signals of the stochastic indicator at the Brent and the WTI chart. The RSI dropped below 70% at the Gasoil chart as well. The bearish impact thus took the upper hand, the more so as the API's data on US oil inventories rendered market fundamentals more bearish. Prices at ICE and NYMEX erased all of the gains they had posted earlier this week, settling with considerable losses.

ICE Gasoil contract for March delivery settled at 577.50 USD on Wednesday, this is +0.75 USD below Tuesday's settlement. With some 77,600 deals the traded volume (front month) was above average.

After the stochastic indicator had given a selling signal at the Gasoil chart and the RSI provided a bearish signal at the WTI and the Brent chart, the lines of the stochastic indicator have also crossed at the WTI and the Brent chart. The fresh selling signals point to more downside and so, the technical constellation can be assessed as bearish this morning. If oil futures drop below Wednesday evening's lows and the stochastic indicator falls below 50%, technical selling pressure would rise even more. Then, WTI might head for its support at 50 USD and Brent might test 59 USD.

U.S.

Nymex above average: Oil futures renewedly declined over night and kept track of their losses after a short phase of consolidation this morning. The traded volume at NYMEX is above average at this time of the day. Market participants are waiting for the European financial and the forex markets to open, for news concerning the strikes at US oil refineries and the economic indicators that are on the agenda today. Moreover, they are looking ahead to the release of the DOE's data on US oil inventories, at 5 p.m. this evening.

Forecast: Crude oil +3.1; Distillates -2.1; Gasoline -0.5 million barrels vs previous week.
API: Crude oil +14.3; Distillates -2.7; Gasoline +1.3 million barrels vs previous week.

Houston (ex-wharf indications 19-2)
380cst $344
180cst $418
MGO $666

New Orleans (ex-wharf indications 19-2)
380cst $369
180cst $377
MGO $639

Fujairah (delivered indications 18-2)

380cst $375
180cst $396
MGO $770

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $318
MGO 0.1%S: $553