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Oil prices rose this morning, paring some of the losses incurred a day earlier after data showed U.S. inventory levels had risen for a sixth week and mounting evidence of weakness spreading through the physical market.

Oil futures at ICE and NYMEX traded in a narrow range in electronic morning trading on Wednesday, somewhat supported by technical movements after prices on Tuesday breached their key resistance lines, and by a combination of bullish fundamentals. The API's report on U.S. oil stocks, the oil workers' strike in Brazil, the closure of a key oil terminal in Libya and the shutdown of a U.S. pipeline lent some support. At the beginning of electronic trade in Europe oil prices increased but tried in vain to rise above their Tuesday's highs, so that they consolidated their gains. In the absence of any directive signals traders were cautious ahead of the release of the DoE data and opted for some profit taking from long positions, the more as the stronger dollar made dollar-nominated oil more expensive for traders outside the U.S. When the DoE data came out rather bearish oil prices collapsed short after the release, the Brent and the WTI even breaching the 21-day MA and triggering a series of technically driven selling orders. Several support lines were breached and oil prices eventually settled near their day's lows.

ICE Gasoil contract for November delivery settled at € 417.47 on Wednesday, this is € 8.23 below Tuesday's settlement. With some 58,200 deals the traded volume (front month) was about on average.

The Stochastic's two lines crossed at ICE and NYMEX on Wednesday, triggering fresh selling signals. The Brent and the WTI meanwhile dropped below their 21-day MA while the gasoil contract at the ICE is still trying to breach this line. And while the Brent even breached its 7-day MA the WTI has not succeeded to do so. Should gasoil and WTI drop below their respectives MA's, technical selling pressure would increase. Because of the Stochastic's bearish signals we consider the technical constellation as slightly bearish this morning. Yet we like to point out that a bullish signal could be triggered should the 7-day MA cross the 21-day MA.

U.S.

Nymex on avarage: Oil futures are trading in a narrow range in East-Asia and early morning electronic trade, just above their Wednesday's lows, still weighed down by the DoE's bearish oil inventory report and the technically driven selling signals. The traded volume at NYMEX is about on average this morning. Investors are waiting for the European financial and forex markets to open, as well as for the release of a few economic indicators.

Forecast: Crude oil +2.5; Distillates -1.8; Gasoline -1.1 million barrels vs previous week.
DOE: Crude oil +2.8; Distillates -1.3; Gasoline -3.3 million barrels vs previous week.
API: Crude oil +2.8; Distillates -3.0; Gasoline -0.2 million barrels vs previous week.

Houston (ex-wharf indications 5-11)
380cst $235
180cst $283
MGO $482

New Orleans (ex-wharf indications 5-11)
380cst $242
180cst $294
MGO $480

Singapore (delivered indications 5-11)

Brent is losing with -$1.43 for December contracts. Singapore paper is down with -$5.75 for 180cst with -$5.25 for 380cst for Nov, and for Dec 180 cst -$6.00 and 380cst with -$6.00 with MGO contracts Nov following with -$1.87 and in Dec with -$1.86. The cargo market is yet to react with 180cst +$5.82, 380cst with +$6.36 and MGO with +$2.16.

380cst $242
180cst $252
MGO $452

Fujairah (delivered indications 5-11)

380cst $238
180cst $275
MGO $612

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $223
MGO 0.1%S: $413