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Crude oil futures traded near six-year lows this morning, after China allowed the yuan to fall sharply for the second day as policymakers look to prop up the nation's ailing economy.

After the unexpected technical rise in oil futures on Monday, the technical indicators partly pointed to renewed tests of the upside on Tuesday morning. Even so, market fundamentals remained bearish. Product futures might be susceptible to short covering today as the August Gasoil contract is going to expire this afternoon. Short covering briefly sent oil futures higher on Tuesday morning as well. However, the bearish market fundamentals eventually outweighed the bullish technical constellation and so oil futures continuously declined after having pulled back from their highs in the morning. Prices were weighed down by the deliberate depreciation of the Chinese Yuan as this was regarded as a signal for a weaker Chinese economy. Moreover, the softer currency makes China's oil imports more expensive. Along with OPEC's monthly energy report, this sent oil futures down on Tuesday. Prices dropped until the evening. Even though oil futures recovered after Gasoil's settlement at 5.30 p.m., the bearish monthly energy report released by the EIA and the API's data on US petroleum stocks prevented a sustainable rise. Moreover, the Yuan continued to lose ground overnight. Selling pressure at oil markets thus remains high. WTI is meanwhile heading for a 6.5-year-low hit in March.

ICE Gasoil contract for August delivery settled at 469.50 USD on Tuesday, this is -10.00 USD below Monday's settlement. With some 44,900 deals the traded volume (front month) was below average.

The buying signals of the Stochastic indicator and of the RSI have meanwhile waned. The indicators are neutral again, leading to expect that technical upward potential has been spent for the time being. The Stochastic indicator might even give a selling signal at the WTI chart if its lines sustainably cross in the course of the day. As long as oil futures stay above Tuesday's lows and there are no other selling cues, we assess the technical constellation as neutral. New selling signals might trigger a sharp downward move, however, which might push WTI below 42 USD, a low it hit in March.

U.S.

Nymex above average: After a short phase of recovery, oil futures at ICE and NYMEX have lost some ground again in Asian and electronic trading this morning. They have already tested Tuesday's lows but have failed to break below these marks so far. The traded volume at NYMEX is clearly above average at this time of day. Market participants are now waiting for the European financial and forex markets to open as well as for the economic indicators that are on the agenda today. Moreover, they are looking ahead to monthly energy reports of IEA and on the DOE's data on US petroleum stocks.

Houston (ex-wharf indications 12-8)
380cst $243
180cst $397
MGO $493

New Orleans (ex-wharf indications 12-8)
380cst $259
180cst $314
MGO $488

Singapore (delivered indications 12-8)

WTI is bearish with -$1.31. Singapore paper is down with -$6.50. for 180cst down with -$6.50 for 380cst for Aug, and for Sep 180 cst -$6.25 and 380cst with -$7.05 with MGO contracts Aug losing with -$1.11 and in Sep with -$1.17. The cargo market is bullish with 180cst +$2.63, 380cst with +$1.96 and MGO with +$1.85.

380cst $260
180cst $275
MGO $448

Fujairah (delivered indications 12-8)

380cst $274
180cst $316
MGO $658

ARA (Amsterdam - Rotterdam - Antwerp)

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