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U.S. oil futures fell to the lowest level in more than four months this morning, as an unexpected gasoline stock build last week dented the demand outlook.

The clearly bearish constellation that had weighed on oil futures at the beginning of this week had already waned on Wednesday morning. The technical constellation was neutral whereas the API's report on US oil inventories released Tuesday night provided some support for oil prices. Even so, market fundamentals remained rather bearish. On Wednesday morning, Brent consolidated above 50 USD. This mark was regarded as a key-support on Wednesday. The euro/dollar advanced in the afternoon, bolstering oil prices. In this phase, Brent even tested its resistance at 51 USD. However, gains were limited near this level. The economic indicators out of the USA came in mixed as the labour market data released by the ADP disappointed whereas the purchasing manager indeces exceeded expectations. The indicators thus failed to provide fresh cues. Market players were already looking ahead to the release of the DOE's report on US petroleum stocks, anyway. This report contained clearly bullish as well as bearish cues and so oil futures struggled to find direction. Shortly after the release of the data, oil prices surged but the upside was renewedly limited by Brent's resistance at 51 USD. Eventually, oil futures slumped as the bearish impact of the increase in US output outweighed the bullish cues. Oil futures at ICE even hit fresh 6-month-lows. Gasoil dropped down to 463.75 USD, the lowest level since January 15. Brent hit the lowest level since January 30, falling to 49.02 USD.

ICE Gasoil contract for August delivery settled at 473.25 USD on Wednesday, this is ±0.00 USD compared to Tuesday's settlement. With some 43,500 deals the traded volume (front month) was below average.

Since its lines have crossed, the Stochastic indicator has generated buying signals at the Brent and the Gasoil chart this morning, favouring tests of the upside. At the WTI chart, these buying signals haven't been confirmed yet and overall downtrends are still intact. Even though the technical signals at the ICE charts are bullish they are not enough to cause a change in the trend. The trends remain intact, pointing to the downside. As long as the Stochastic indicator doesn't give a buying signal at the WTI chart, we thus keep assessing the technical constellation as neutral regarding the buying signals at ICE charts as less influential. The MA 7 is still limiting upward potential at the ICE charts. If oil futures stay above Wednesday's lows, the buying signals might prompt investors to cover their short positions, though. In this case, oil futures would test the MA 7.

U.S.

Nymex below average: Oil futures at ICE and NYMEX traded in a narrow range in Asian trading this morning. Currently they are edging lower as the dollar is regaining some ground. The traded volume at NYMEX is slightly above 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.

Forecast: Crude oil -1.5; Distillates +1.6; Gasoline -0.6 million barrels vs previous week.
DOE: Crude oil -4.4; Distillates +0.7; Gasoline +0.8 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 6-8)
380cst $255
180cst $411
MGO $503

New Orleans (ex-wharf indications 6-8)
380cst $269
180cst $328
MGO $487

Singapore (delivered indications 6-8)

WTI is bearish with -$0.70. Singapore paper is down with -$5.50. for 180cst up with -$3.25 for 380cst for Aug, and for Sep 180 cst -$4.00 and 380cst with -$3.75 with MGO contracts Aug losing with -$0.25 and in Sep with -$0.044. The cargo market is bullish with 180cst +$1.34, 380cst with +$2.61 and MGO bullish with -$0.43.

380cst $263
180cst $282
MGO $443

Fujairah (delivered indications 6-8)

380cst $275
180cst $319
MGO $659

ARA (Amsterdam - Rotterdam - Antwerp)

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