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U.S. oil futures fell to the lowest level in more than six years this morning, after data showed that rigs drilling for oil in the U.S. rose last week, underlining concerns over robust domestic production.

Market fundamentals remained clearly bearish at oil markets on Friday morning, whereas short-covering was favoured by technical buying cues. In the first half of the day, oil futures consolidated above their first supports, even testing their resistances. Still, the technical buying cues failed to outweigh the bearish market situation, the more so, as Oman announced it would increase its oil output and a supertanker loaded with North Sea crude oil returned to Scotland due to weak demand. Whilst Brent lost more ground than the other contracts, Gasoil and WTI only breached their first supports when the economic indicators out of the USA were released in the afternoon. The dollar surged on convincing data on the US labour market (July). This made dollar-priced oil futures more expensive for investors outside the USA. Buying thus ebbed and traders tended to take more profits from their long positions. That is why oil futures at ICE and NYMEX hit fresh long-term lows in the course of the evening. Whilst WTI hit a 5-month-low, Brent even slid to the lowest level in 6.5 months. Later on Friday evening, Baker Hughes released its weekly rig count. According to this report, the number of active oil rigs in the USA has increased for the third consecutive week. Since economic indicators out of China disappointed at the weekend, selling pressure remained this morning. Therefore, prices in London and New York have already dropped below Friday's lows.

ICE Gasoil contract for August delivery settled at 464.50 USD on Friday, this is +3.00 USD above Thursday's settlement. With some 33,100 deals the traded volume (front month) was below average.

The buying signals the Stochastic indicator and the RSI had given on Friday have meanwhile waned and so, the indicators are neutral this morning. The technical downtrends remain intact. The upward slack they provide is still limited by the MA 7. Oil futures have already dropped below Friday's lows. That is why further downward potential has developed. At the moment there are no technical selling cues but, overall, the technical downside remains. We thus consider the technical constellation as neutral to bearish this morning. There is still some potential down to the lower Bollinger Band.

U.S.

Nymex above average: Oil futures consolidated below Friday's lows in Asian trading this morning weighed down by the disappointing data out of China released at the weekend and by the Baker Hughes report on active US oil rigs. However, they have regained some ground in early European trade. The traded volume at NYMEX is clearly above average at this time of day. Investors are now waiting for the European financial and forex markets to open. As to economic indicators, there are none on the agenda today.

Houston (ex-wharf indications 10-8)
380cst $245
180cst $409
MGO $500

New Orleans (ex-wharf indications 10-8)
380cst $264
180cst $301
MGO $490

Singapore (delivered indications 6-8)

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: $463