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Crude oil futures rose this morning to snap a week-long decline as investors bet falling U.S. production would cut a global surplus, while the country's gasoline and distillate inventories dropped more than expected.

On Thursday morning, technical selling pressure had waned but market fundamentals pointed to more downward moves. In the first half of the day, there was limited profit taking, the more so as the API's data on US oil inventories still weighed on prices. In the course of the day, traders were looking ahead to the DOE's report which was only due at 5 p.m. this Thursday due to US holiday on Monday. The DOE's data immediately added to selling pressure, making oil futures plummet. The bearish effect of the massive builds in US crude oil inventories outweighed the bullish cues from the draw in product stocks and so, oil futures hit new lows at the time when the ICE Gasoil's settlement took place. In the evening, however, oil futures saw an unexpected counter reaction. At first, trade was dominated by market fundamentals but later on, it was driven by risk factors, a Caprock Risk Management analyst concludes. Market players shifted capital to riskier assets. Oil futures thus surged, along with equities. The change in the Brent front month at 8.30 p.m. capped the rise once again but oil futures extended their gains over night, ending the day with fresh highs.

ICE Gasoil contract for November delivery settled at 449.50 USD on Thursday, this is 4.25 USD below Wednesday's settlement. With some 88,300 deals the traded volume (front month) was far above average.

The lines of the Stochastic indicator have crossed at ICE as well as at NYMEX charts, generating fresh buying cues. The lines of the 7-period and the 21-period moving averages are converging at the Brent and the WTI chart. At the Gasoil chart, these lines have already crossed, providing a selling signal. The crude oil contracts Brent and WTI didn't settle below the 21-period moving average, which is why they are currently consolidating between these two lines. The technical signals aren't completely clear but at the moment the buying signals of the Stochastic indicator predominate and so, we assess the technical constellation as slightly bullish. Thursday's highs will be crucial for the upward potential of oil futures today. If oil prices stay below Thursday's highs, upward potential is likely to have been spent which might prompt investors to take profits from Thursday evening's rally. If they don't, oil futures might approach the 7-period moving average.

U.S.

Nymex above average : Oil futures failed to break above Thursday's highs in early morning trading but have meanwhile succeeded in doing so. The traded volume at NYMEX is far above average this morning, with traders already rolling their positions to the December WTI contract, for the November contract is going to expire on Tuesday. Market participants are now waiting for the European financial and forex markets to open as well as for the release of a few economic indicators. Moreover, they are eying the release of the Baker Hughes report on the number of active US oil rigs.

Forecast: Crude oil +2.6; Distillates -0.6; Gasoline -0.4 million barrels vs previous week.
DOE: Crude oil +7.6; Distillates -1.5; Gasoline -2.6 million barrels vs previous week.
API: Crude oil +9.3; Distillates -2.7; Gasoline -5.0 million barrels vs previous week.

Houston (ex-wharf indications 16-10)
380cst $225
180cst $295
MGO $487

New Orleans (ex-wharf indications 16-10)
380cst $239
180cst $292
MGO $473

Singapore (delivered indications 16-10)

Brent is gaining with +$1.39. Singapore paper gaining with +$3.25 for 180cst with +$2.50 for 380cst for Oct, and for Nov 180 cst +$3.35 and 380cst with +$3.20 with MGO contracts Oct down with +$0.63 and in Nov with +$0.62. The cargo market is losing with 180cst -$2.51, 380cst with -$1.25 and MGO with -$0.07.

380cst $235
180cst $250
MGO $440

Fujairah (delivered indications 16-10)

380cst $245
180cst $271
MGO $608

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $229
MGO 0.1%S: $433