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Brent crude edged up from a sharp drop this morning, but was on track for the biggest weekly loss in more than two months as swelling stocks weighed on the market.

Oil futures at ICE and NYMEX stabilized in the course of the European session on Thursday in a market without direction after Wednesday's hefty losses. Trading volume that was limited on Wednesday because of the U.S. holiday had increased again. Despite a combination of bearish fundamentals prices could not breach their previous day's lows that limited oil's downside. The news that Petrobras and the union have come to an agreement in the oil workers' strike had no impact on prices while the expiry at 1.00 p.m. of the ICE gasoil contract for November delivery lent some support as traders covered some of their short positions. After the expiry selling pressure increased again, weighing on prices at ICE and NYMEX that breached several supports in the process. As the OPEC's monthly energy report was not apt to ease investors' worries about the persisting global oversupply, they eventually took the end of the strike in Brazil and the API's bearish oil inventory report as a reason to get rid of their long positions. Therefore prices fell below their Wednesday's lows already before the release of the DoE's report on petroleum stocks which triggered a series of technically driven selling orders. The bearish report, showing a build in crude and distilled product, stocks and a rise in U.S. oil production, accelerated oil's slide. The futures consequently settled considerably lower in London and New York.

ICE Gasoil contract for November delivery settled at 431.25 USD on Thursday, this is 9.75 USD below Wednesday's settlement. With some 107,100 deals the traded volume (front month) was well below average.

Neither Stochastic nor RSI have triggered any fresh signals yet but both indicators are at the oversold level on all charts at ICE and NYMEX, signalling that a technical upward correction is due. But for such a correction the lines of the Stochastic indicator must cross and/or the RSI must breach the 30 line. There is a rising upward potential because of possible short covering as the increase in open interest these past two days together with the latest price collapse is a sign for an increase in short positions. Today one must closely watch the Bollinger bands at the charts. Brent and WTI both breached the lower band and settled below this level. Technical analysts take this as a clear sign that an upward correction has become more likely. The 7 day moving average is a key resistance at all charts today that would limit oil's rise. At any rate technical selling pressure eased but in the absence of fresh signals we consider the technical constellation still as neutral this morning.

U.S.

Nymex is above average: Oil futures traded in a very narrow range this morning in East-Asia but regained ground at the beginning of European trading, investors starting to cautiously covering their short positions ahead of the weekend. The traded volume at NYMEX is well above average this morning. Investors are waiting for the European financial and forex markets to open today, the release of a series of economic indicators, as well as for the IEA's monthly energy report.

Forecast: Crude oil +1.1; Distillates -1.1; Gasoline -0.6 million barrels vs previous week.
API: Crude oil +4.2; Distillates +0.4; Gasoline -2.1 million barrels vs previous week.
API: Crude oil +6.3; Distillates -0.5; Gasoline -3.2 million barrels vs previous week.

Houston (ex-wharf indications 13-11)
380cst $215
180cst $284
MGO $477

New Orleans (ex-wharf indications 13-11)
380cst $230
180cst $282
MGO $466

Singapore (delivered indications 13-11)

Brent is losing with -$1.17 for December contracts. Singapore paper is down with -$4.25 for 180cst with -$4.20 for 380cst for Nov, and for Dec 180 cst -$4.75 and 380cst with -$4.50 with MGO contracts Nov down with -$0.61 and in Dec with -$0.56. The cargo market is bearish with 180cst -$7.55, 380cst with -$7.71 and MGO with up -$0.78.

380cst $224
180cst $233
MGO $428

Fujairah (delivered indications 13-11)

380cst $234
180cst $270
MGO $606

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $199
MGO 0.1%S: $403