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Oil futures at ICE and NYMEX consolidated their losses on Tuesday morning, trading within a narrow technical range between MA 7 and Ma 21, trying their upside but failed to breach the key resistance lines. The major bearish fundamentals such as Russia's record oil production and China's ailing oil demand seemed to have been priced in. When the gasoil contract at the ICE breached its 21-day moving average line, more upside was opened. Consequently the Brent and the WTI contracts also breached the upper limit of their trading range, triggering a series of technically driven buying orders (see also our technical analysis on Tuesday). When Libya declared force majeure on shipments from its Zueitina oil terminal, Brazilian Petrobras announced a strike of its oil workers and news spread that the Colonial pipeline that carries oil products from the Southern refineries to the East coast of the U.S. was shut down, oil's rise was accelerated. If the important 50 USD resistance of the Brent and the 47.50 USD resistance of the WTI slowed the rise, mounting buying pressure propelled oil prices to their day's highs in late trading. The Stochastic does not produce any fresh signals this morning after the selling signal it had triggered at the Brent chart on Tuesday has been absorbed. If the indicator is at the overbought level, signalling a downward correction, more upside has been produced when prices at ICE and NYMEX breached their 21-day moving average lines which acted as key resistances. As a consequence a series of technically driven buying orders were triggered. In the absence of any fresh signals this morning we consider the technical constellation as slightly bullish as the 21-day MA's were breached. Oil futures could now try to hit the upper Bollinger bands at 49.65 USD (WTI), 486.50 USD (gasoil) and 52.55 USD (Brent). As the situation is rather unstable and some of oil's upside has already been absorbed by yesterday's strong price increase the Stochastic indicator might as well trigger a selling signal should the bullish influence of the fundamental situation diminish. In this case a strong downward correction would be initiated but for the time being, this is rather unlikely.

ICE Gasoil contract for November delivery settled at 465.50 USD on Tuesday, this is 12.00 USD above Monday's settlement. With some 43,600 deals the traded volume (front month) was below average.

U.S.

Nymex: Oil futures are trading in a narrow range in East-Asia and early morning electronic trade, testing their first supports at the ICE in a bear market but currently supported by the API report released last night and an encouraging Chinese indicator. The traded volume at NYMEX is above average this morning. Investors are waiting for the European financial and forex markets to open, as well as for the release of a series of economic indicators and of the DoE's report on U.S. petroleum inventories today at 4.30 p.m.

The API's estimates released last night show a build in U.S. crude stocks and a draw in distillated product and gasoline reserves.
As the maintenance period is ending, refinery run rates increase again, by a total of 1.6% in the course of the past three weeks. Also for the week ending October 30 analysts expect a rise in crude demand as refiners boost production. So crude stocks are seen rising slower than before. The API expects a rather modest build of 2.8 million barrels, which is in line with analysts' forecasts. The draw is thus not really a bearish argument while the draw in Cushing crude stocks is seen slightly bullish for oil. As for the API, the agency expects a draw in refined product stocks despite a probable increase in refinery production. First of all it is distillated product stocks that dropped due to a seasonally higher demand, even though meteorologists forecast mild temperatures in Europe and the U.S. The higher-than-expected draw is the most bullish factor of the report. If gasoline reserves fell rather modestly they are not in traders' focus at this time of the year. If the API's report is not strongly bullish, its bullish factors dominate the oil market today, even though traders are waiting for the more important figures of the DoE report to be relased at 4.30 p.m. in the afternoon. This report also gives an idea of oil demand, U.S. crude production and imports.

Houston (ex-wharf indications 4-11)
380cst $231
180cst $282.50
MGO $480

New Orleans (ex-wharf indications 4-11)
380cst $239
180cst $290.50
MGO $471.50

Singapore (delivered indications 4-11)

Brent is surging with +$1.53 for December contracts. Singapore paper is following with +$6.25 for 180cst with +$6.80 for 380cst for Nov, and for Dec 180 cst +$7.00 and 380cst with +$7.10 with MGO contracts Nov following with +$2.15 and in Dec with +$2.06. The cargo market is yet to react with 180cst -$2.60, 380cst down with -$3.14 and MGO with -$0.24.

380cst $247
180cst $255
MGO $456

Fujairah (delivered indications 4-11)

380cst $249
180cst $285
MGO $613

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $228
MGO 0.1%S: $428