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Oil prices rose in early trading this morning, clawing back a part of the 6 percent slump in the previous session after a shock jump in U.S. crude inventories and record Saudi output, although analysts said sentiment remained bearish.

Oil futures in London and New York tended to the downside on Wednesday morning. Whilst the technical constellation was neutral, the EIA's monthly energy report, the rise in Saudi Arabia's oil output and the API's bearish report on US oil inventories favored tests of the downside at oil markets. The strong supports at € 493.22 Gasoil and € 53.47 Brent initially prevented more considerable losses, the more so as market players were eying the release of the DOE's inventories report. This report came in clearly bearish triggering a sharp decline in oil futures at ICE and NYMEX in the afternoon. Oil prices dropped below the supports that had remained strong until then, triggering even more technical selling orders. This development generated further technical selling signals as the lines of the stochastic indicator crossed. Fundamental and technical selling pressure made prices decline until late in the evening. Oil futures thus finished with considerable losses.

ICE Gasoil contract for April delivery settled at € 487.69 on Wednesday, this is -€ 10.6 below Tuesday's settlement. With some 35,400 deals the traded volume (front month) was below average.

When the lines of the stochastic indicator crossed, the indicator generated a selling signal both at ICE and at NYMEX charts. Even though the downward potential generated by these selling signals were partly spent during Wednesday's price decrease, another technical sell-off might be triggered if the indicator drops below 50%. At ICE and at NYMEX the short-term uptrends are still intact but there is some slack for further price declines. If oil futures fall below their uptrends and if the MA 7 crosses the MA 21 at ICE charts, Brent might test € 49.78 or even € 48.4 in the coming days. Against the backdrop of the selling signals of the stochastic indicator we consider the technical constellation bearish this morning.

U.S.

Nymex above avarage: Oil futures are slightly coming back from Wednesday's lows as investors are covering some of their short-positions. Still prices remain on a low level. The traded volume at NYMEX is far above average at this time of the day. Investors are waiting for the European financial and the forex markets to open. They are also eying today's economic indicators.

Forecast: Crude oil +3.4; Distillates +0.9; Gasoline -1.3 million barrels vs previous week.
DOE: Crude oil +10.9; Distillates -0.3; Gasoline +0.8 million barrels vs previous week.
API: Crude oil +12.2; Distillates -0.3; Gasoline +2.7 million barrels vs previous week.

Houston (ex-wharf indications 9-4)
380cst $313
180cst $475
MGO $594

New Orleans (ex-wharf indications 9-4)
380cst $322
180cst $383
MGO $603

Singapore (delivered indications 9-4)

WTI is losing with -$1.55. Singapore paper is bearish with -$7.30 for 180cst with -$7.05 for 380cst for Apr, and for May 180 cst -$7.50 and 380cst with -$8.00 with MGO contracts Apr losing with -$1.76 and in May with -$1.74. The cargo market is bullish with 180cst +$4.30, 380cst with +$4.37 and MGO bullish with +$0.72.

380cst $322
180cst $343
MGO $530

Fujairah (delivered indications 9-4)

380cst $328
180cst $344
MGO $734

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $298
MGO 0.1%S: $508