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WTI oil futures edged higher for the second consecutive day this morning, amid speculation weekly supply data due later in the session will show U.S. crude inventories fell at a faster pace than expected last week.

Market fundamentals as well as the technical constellation were bearish on Tuesday morning, favouring a downward move at oil markets. Even so, Monday's losses and the rising euro/dollar prompted investors to cover some of their short positions. Brent thus tested its key-resistance at 50 USD. When the contract sustainably breached this resistance later on Tuesday morning, technical buying was triggered and so, oil futures remained clearly above Monday's lows. Stop-loss buying orders which were triggered automatically pushed oil prices at ICE and NYMEX higher. Domestic prices in the Eurozone also steadied against the backdrop of this rise. Buying orders ebbed, however, when Brent found strong resistance between 50.35 and 50.50 USD and Gasoil failed to breach its key-resistance at 480.00 USD. Market fundamentals didn't provide any fresh cues that might have pushed prices further up. Besides, the overall situation on the market is still bearish. Fed member Dennis Lockhart's comments bolstered the dollar in the evening, putting pressure on the euro. Mr. Lockhart unexpectedly clearly promoted a rate hike in September. The steadier dollar made oil futures, which are priced in dollars, more expensive for investors outside the USA. However, oil futures retreated but briefly. Short covering continued and so oil futures remained on the higher level compared to Monday, the more so as the API's data on US oil inventories came in bullish. Futures at ICE and NYMEX thus defended their gains, ending the day in the black.

ICE Gasoil contract for August delivery settled at 473.25 USD on Tuesday, this is 1.00 USD below Monday's settlement. With some 50,700 deals the traded volume (front month) was slightly below average.

The bearish technical bias has waned after Tuesday's short-covering. The lines of the Stochastic indicator have converged again at ICE and NYMEX charts which is why the indicator can be considered as neutral. If the lines sustainably cross, a buying signal would be generated but this hasn't been the case yet. The RSI is neutral as well. It will only provide a buying signal if it clearly exceeds 30%. Since fresh cues are still lacking and the bearish note of the Stochastic indicator has waned, we assess the technical constellation as neutral. Tuesday's highs will most likely be key-resistances whereas the 50.00 USD mark remains a psychological support for Brent. If the North Sea crude oil contract breaks below this support it might renewedly approach the 6-month-low hit earlier this week. Up to now, these lows are limiting the downtrend of the contract.

U.S.

Nymex below average: Oil futures have gained more ground this morning as investors continued to cover their short positions, economic data out of China came exceeded expectations and the API's report on US petroleum inventories provided bullish cues. Moreover, Brent has meanwhile breached its key-resistance. In the course of the morning, the steadier dollar might limit the upside, though. The traded volume at NYMEX is far below average at this time of day. Investors 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 4.30 p.m., the DOE will release its data on US petroleum stockpiles.

Forecast: Crude oil -1.5; Distillates +1.6; Gasoline -0.6 million barrels vs previous week.
API: Crude oil -2.4; Distillates +1.7; Gasoline -0.9 million barrels vs previous week.

Houston (ex-wharf indications 5-8)
380cst $256
180cst $411
MGO $503

New Orleans (ex-wharf indications 5-8)
380cst $271
180cst $338
MGO $487

Singapore (delivered indications 5-8)

WTI is bearish with -$0.0.. Singapore paper is up with +$0.75. for 180cst up with +$1.25 for 380cst for Aug, and for Sep 180 cst +$1.25 and 380cst with +$1.50 with MGO contracts Aug losing with -$0.50 and in Sep with -$0.42. The cargo market is bearish with 180cst -$2.26, 380cst with -$4.58 and MGO bullish with +$0.15.

380cst $263
180cst $282
MGO $446

Fujairah (delivered indications 5-8)

380cst $281
180cst $319
MGO $659

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $258
MGO 0.1%S: $443