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Crude oil futures rose for the second straight session this morning, as appetite for growth-linked assets improved after the People's Bank of China reassured markets that it will not continuously devalue the yuan.

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.

At the Brent chart the RSI breached the 30% line in the morning, triggering a buying signal, whereas the Stochastic indicator is still neutral. At the WTI chart however, the Stochastic triggered a selling signal after its two lines crossed. Both the bullish signal of the RSI and the bearish signal of the Stochastic could be confirmed at the respective other chart in the course of the day. Because of these conflicting signals we assess the technical constellation still as neutral this morning.

U.S.

Nymex above average: After consolidating Wednesday's gains and trading in a narrow range in Asian trading hours, oil prices breached their first resistance lines at the beginning of the European session. The traded NYMEX volume 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 release of some economic indicators, most of them in the U.S.

Forecast: Crude oil -2.1; Distillates +1.0; Gasoline -0.8 million barrels vs previous week.
DOE: Crude oil -1.7; Distillates +3.0; Gasoline -1.3 million barrels vs previous week.
API: Crude oil -0.8; Distillates +2.2; Gasoline +0.1 million barrels vs previous week.

Houston (ex-wharf indications 13-8)
380cst $245
180cst $396
MGO $498

New Orleans (ex-wharf indications 13-8)
380cst $261
180cst $319
MGO $482

Singapore (delivered indications 13-8)

WTI is bullish with +$0.82. Singapore paper is up with +$1.75. for 180cst with +$1.75 for 380cst for Aug, and for Sep 180 cst +$1.75 and 380cst with +$1.80 with MGO contracts Aug gaining with +$1.20 and in Sep with +$1.06. The cargo market is bearish with 180cst -$6.63, 380cst with -$6.75 and MGO with -$0.93.

380cst $257
180cst $271
MGO $446

Fujairah (delivered indications 13-8)

380cst $270
180cst $315
MGO $657

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $253
MGO 0.1%S: $458