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Oil prices edged higher this morning, as hopes the Organization of the Petroleum Exporting Countries will cut output quotas when it meets later this week provided support. Gains were limited amid uncertainty about how quickly the global glut of crude is set to shrink.

The bearish market fundamentals and the technical constellation had already pointed to tests of the downside on Monday morning. When oil futures dropped below Friday's lows, more downward potential was generated and so the case seemed clear. However, oil futures changed direction in the course of the morning. After the long US-weekend, the price increase might have been triggered by physical traders who raised their long positions after having stayed on the sidelines before Thanksgiving. The upward move was favored by strong equities and Brent and WTI's break above the 7-period moving averages. Moreover, the expiry of the December NYMEX Heating Oil and Gasoline contracts made oil futures volatile. When data provider Genscape forecast that US crude oil stockpiles in Cushing had renewedly increased last week, the bearish constellation regained the upper hand even though oil futures had stabilized on a high level in the early afternoon. By the time of the Gasoil settlement at 5.30 p.m. oil prices started to retreat. Gasoil even hit a fresh low, slipping to 405.50 USD - the lowest level since March 2009. The contract thus hit a new 6.5-year low. Although WTI was able to remain above its earlier low in the evening, oil futures ended the day clearly in the red.

ICE Gasoil contract for December delivery settled at 419.50 USD on Monday, this is +1.25 USD above Friday's settlement. With some 61,900 deals the traded volume (front month) was above average.

The selling signals of the Stochastic indicator are largely spent after Monday's price drop. Oil futures settled below their 7-period moving averages, making tests of the 21-period moving averages unlikely. By hitting a new 6.5-year low, the ICE Gasoil contract has generated fresh downward potential which might even bring the 400.00 USD threshold on the table. Compared to Monday, technical selling pressure has eased, though. That is why we assess the technical constellation as neutral to bearish this morning. However, the constellation has become slightly unstable as new signals are lacking. If Brent and WTI settle above the 7-period moving averages, the 21-period moving averages might come within reach. If the contracts settle below the 7-period moving averages, however, a down trend might establish which could head for this year's lows. Either way, the market fundamentals are likely to push the technical factors in the background this week.

U.S.

Nymex is above average: Oil futures have advanced in East-Asia and in electronic Globex trade this morning as market players covered some of their short positions after Monday evening's downward move. However, strong resistances are limiting the upside. The traded volume at NYMEX is above average this morning. Investors are waiting for the European financial and forex markets to open today and for the release of a raft of indicators. The API will release its data on US oil inventories at 10.30 p.m. tonight. The data will be available on our website on Wednesday morning.

Houston (ex-wharf indications 1-12)
380cst $204
180cst $285
MGO $445

New Orleans (ex-wharf indications 1-12)
380cst $216
180cst $265
MGO $453

Singapore (delivered indications 1-12)

Brent is up with +$0.15 for December contracts. Singapore paper is up with +$2.20 for 180cst with +$3.25 for 380cst for Dec, and for Jan 180 cst +1.75 and 380cst with +$2.05 with MGO contracts Dec with -$0.80 and in Jan with -$0.81.The cargo market is bearish with 180cst -$4.07, 380cst with -$3.31 and MGO with -$0.11.

380cst $216
180cst $230
MGO $419

Fujairah (delivered indications 1-12)

380cst $212
180cst $254
MGO $606

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : 198
MGO 0.1%S: $383