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Crude oil futures edged higher this morning, amid indications that Saudi Arabia could cut production at the end of the summer and following a larger-than-expected drawdown in U.S. supplies last week.

Oil prices in London and New York declined on Wednesday morning, weighed down by the bearish market fundamentals. The data on US oil inventories the API had released on Tuesday night came in slightly bearish. Moreover, the fact that Reuters experts estimated the current oversupplies at 2.99 mbpd favoured a downward move. The rather bullish technical constellation offset this, however, as the Stochastic indicator provided buying cues at the Gasoil and the WTI chart. That is why the supports at 52.50 USD Brent and at 47.30 USD WTI remained strong. By noon, oil futures already climbed back to the levels they had had at the beginning of the European session. In the course of the afternoon, prices consolidated below their first resistances, whilst investors were waiting for the DOE's data on US oil stocks and the results of the FOMC's meeting (Wednesday evening). As to the DOE's data, the bullish aspects clearly dominated and so traders increased their long positions. When Brent broke above its first resistance, the Stochastic indicator at the Brent chart confirmed the buying signals it had already given at the WTI and the Gasoil charts. This triggered more technical buying and short-covering. Consequently, oil futures rallied, consolidating on a high level as traders were still looking ahead to the FOMC's meeting results. The Fed's statement lead market players to expect that a rate hike in September is more likely than expected. This bolstered the dollar, weighing on oil prices. Despite the slight decline, oil futures were able to defend some of their earlier gains, settling in the black.

ICE Gasoil contract for August delivery settled at 495.75 USD on Wednesday, this is 0.25 USD above Tuesday's settlement. With some 48,000 deals the traded volume (front month) was above average.

After the release of the DOE's data, the Stochastic indicator at the Brent chart yesterday confirmed the bullish signals that it had already provided at the Gasoil and the WTI chart. At the WTI chart, the indicator has already exceeded 50%, underlining its bullish impact. Moreover, WTI broke above its downtrend that had limited gains before. The contract thus also surpassed the resistance at the MA 7. That is why the technical constellation can be regarded as bearish this morning. If Brent and Gasoil also break above the MA 7 in the course of the day, technical buying pressure would increase.

U.S.

Nymex on average: Oil futures remain in a rather narrow range this morning, after having showed large price swings on Wednesday evening. The technical constellation and market fundamentals currently are providing contrasting cues. The traded volume at NYMEX is on average at this time of day. While there is a single U.S. indicator on the agenda today, investors are waiting for the European financial and forex markets to open.

Forecast: Crude oil ±0.0; Distillates +1.3; Gasoline ±0.0 million barrels vs previous week.
DOE: Crude oil -4.2; Distillates +2.6; Gasoline -0.4 million barrels vs previous week.
API: Crude oil -1.9; Distillates +4.3; Gasoline +1.3 million barrels vs previous week.

Houston (ex-wharf indications 30-7)
380cst $271
180cst $465
MGO $514

New Orleans (ex-wharf indications 30-7)
380cst $282
180cst $351
MGO $488

Singapore (delivered indications 30-7)

WTI is bullish with +$1.19. Singapore paper is up with +$8.30 for 180cst up with +$7.90 for 380cst for Aug, and for Sep 180 cst +$8.05 and 380cst with +$6.80 with MGO contracts Aug gaining with +$1.18 and in Sep with +$1.18. The cargo market is bearish with 180cst -$2.64, 380cst with -$1.16 and MGO bullish with +$0.15.

380cst $285
180cst $295
MGO $458

Fujairah (delivered indications 30-7)

380cst $294
180cst $326
MGO $698

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $278
MGO 0.1%S: $468