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Brent oil futures regained strength this morning, as investors returned to the market to seek cheap valuations after prices plunged more than 5% to a six-month low in the previous session.

Market fundamentals as well as the technical constellation provided bearish cues early Monday morning. This indicated that oil futures would retreat. According to Baker Hughes, the number of active US oil rigs renewedly increased, whilst Reuters analysts said that OPEC output rose in July. Moreover, money managers raised their bets on falling prices last week and economic indicators released in China last weekend missed expectations. As to the technical constellation, the Stochastic indicator gave fresh selling signals at ICE and NYMEX charts when its lines crossed. Oil futures in London and New York thus kept track of the bearish cues, already dropping below their first supports in the early morning. Fresh downward potential was particularly generated, when Gasoil broke below 480.00 USD. Even though there wasn't any further bearish news in the course of the day, oil markets failed to overcome the bearish bias, continuously testing their supports. Later in the afternoon, Brent even breached its support at 50.00 USD. The North Sea benchmark blend thus dropped to its lowest level since January 30. Gasoil, too, hit a fresh 6-month-low. Oil futures failed to retrace their losses and so all contracts ended the day near fresh lows.

ICE Gasoil contract for August delivery settled at 474.25 USD on Monday, this is 14.50 USD below Friday's settlement. With some 53,500 deals the traded volume (front month) was on average.

After having given selling signals on Monday, the Stochastic indicator is still bearish, favouring tests of the downside. Brent has meanwhile dropped below the psychologically important mark of 50 USD which has generated more downward potential. Part of the downward potential has already been spent by Monday's hefty losses. That is why some market players might tend to cover their short-positions this morning. Brent might be pivotal for an upward correction, as well as for another price slump. If the North Sea crude oil sort remains below 50 USD, it is likely to test Monday's low. We assess the technical constellation as bearish as the Stochastic indicator is still bearish and as Brent has fallen below 50 USD.

U.S.

Nymex above average: After oil futures had hit new lows on Monday evening, investors covered some of their short-positions over night. However, the 50.00 USD mark remained a strong resistance for Brent and so futures are still consolidating near 6-month-lows. The traded volume at NYMEX is above average at this time of day. Market participants are now waiting for the European financial and forex markets to open as well as on the economic indicators that are on the agenda today. At 10.30 p.m., the API will release its data on US petroleum stockpiles.

Houston (ex-wharf indications 4-8)
380cst $263
180cst $413
MGO $505

New Orleans (ex-wharf indications 4-8)
380cst $274
180cst $346
MGO $493

Singapore (delivered indications 4-8)

WTI is bearish with -$0.79. Singapore paper is down with -$1.75 for 180cst up with -%3.30 for 380cst for Aug, and for Sep 180 cst -$1.75 and 380cst with -$4.00 with MGO contracts Aug gaining with +$0.25 and in Sep with +$0.27. The cargo market is bearish with 180cst -$9.39, 380cst with -$12.00 and MGO with $1.26.

380cst $268
180cst $283
MGO $448

Fujairah (delivered indications 4-8)

380cst $277
180cst $313
MGO $659

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $263
MGO 0.1%S: $453