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Crude oil prices gained smartly in Asia this morning as investors saw a recent sell-off overdone and tension in the Middle East support prices.

Oil futures at ICE and NYMEX rose in electronic trading in Europe on Wednesday, supported by a bullish API report released Tuesday night. Gasoil even hit its 7-day moving average line while WTI was weighed down by forecasts of a strong build in Cushing crude stocks. But around noon the bearish fundamentals took the lead and oil prices erased all of its gains to hit fresh intraday lows when Saudi Arabia announced a 113.000 b/d increase of its September exports compared to the previous month. When the DoE report was judged rather bearish oil's slide was accelerated and when WTI fell below its previous day low of 40.60 USD it aimed at its psychologically important 40.00 USD support. The support was temporarily breached but then the slide was stopped, the DoE's data not applying enough pressure on the market to send prices any further down. With the expiry of the WTI front month ahead traders covered some of their short positions to take profit from their earlier bets in a volatile market. So the futures compensated most of its losses in late NYMEX trading and in the end settled lower in London and New York.

ICE Gasoil contract for November delivery settled at 422.50 USD on Wednesday, this is 0.75 USD below Tuesday's settlement. With some 77.500 deals the traded volume (front month) was above average.

The long-term downtrends are still intact, oil prices trading below their 7-day moving average lines that still limit oil's margin. Neither the RSI nor the Stochastic have produced any fresh signals. At the WTI chart the Stochastic would trigger a selling signal should its two lines cross. Such a signal could initiate a further price decline. But as the WTI contract for December delivery expires tomorrow the indicator's influence is presumably not as strong as usual, and would need a confirming signal at the gasoil and the Brent chart. But traders might as well cover some of their short positions ahead of the contract's expiry which would increase the volatility in the oil market. Therefor we consider the technical constellation still as neutral this morning.

U.S.

Nymex is above average: Oil futures are trading in a very narrow range in East-Asia but rose at the beginning of the European session this morning, breaching several resistance lines. The traded volume at NYMEX is well above average this morning while the volume of the January contract is already higher than that of the front month, the contract for December delivery expiring on Friday. Investors are waiting for the European financial and forex markets to open today and for the release in the afternoon of some U.S. indicators. They will also eye the official DoE report on U.S. petroleum stocks.

Forecast: Crude oil +2.0; Distillates -0.2; Gasoline -0.9 million barrels vs previous week.
DOE: Crude oil +0.3; Distillates -0.8; Gasoline +1.0 million barrels vs previous week.
API: Crude oil -0.5; Distillates -1.5; Gasoline +0.2 million barrels vs previous week.

Houston (ex-wharf indications 19-11)
380cst $203
180cst $293
MGO $455

New Orleans (ex-wharf indications 19-11)
380cst $213
180cst $263
MGO $445

Singapore (delivered indications 19-11)

Brent is gaining with +$0.19 for December contracts. Singapore paper is up with +$2.50 for 180cst with +$1.80 for 380cst for Dec, and for Jan 180 cst +$2.45 and 380cst with +$2.25 with MGO contracts Dec with +$0.20 and in Jan with +0.16 .The cargo market is bearish with 180cst -$5.28, 380cst with -$5.53 and MGO with up -$0.17.

380cst $218
180cst $231
MGO $420

Fujairah (delivered indications 19-11)

380cst $214
180cst $258
MGO $604

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $193
MGO 0.1%S: $393