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WTI oil futures rebounded on Wednesday, amid speculation weekly supply data due later in the session will show U.S. crude inventories fell for the first time in 11 weeks.

Market fundamentals were still bearish Tuesday morning, indicating further tests of the downside. The increase in Chinese crude oil imports rather stemmed from the country's efforts to raise strategic stockpiles than from an actual growth in demand which is why it didn't have any sustainable impact on oil prices. The technical constellation hadn't provided any clear signals yet. Even so, we had already pointed out in the morning that there would be a selling signals if oil futures broke below Monday's lows. Whilst oil futures at ICE and NYMEX still traded in a narrow range Tuesday morning, they dropped below Monday's lows in the early afternoon, weighed down by the bearish fundamentals. This triggered a technical sell-off which sent oil futures down to 7-year lows. Brent tested the psychologically important key-support at 40 USD but failed to sustainably breach it. Traders took advantage of this, covering their short-positions in late-afternoon trade. Consequently, oil futures saw a counter-reaction. After our office hours the EIA released its monthly energy report which provided more bearish cues, briefly adding to selling pressure. However, the API's data on US oil inventories had a bullish note as far as crude oil stockpiles were considered. This bolstered oil prices until this morning, even though the changes in US product stocks are bearish.

ICE Gasoil contract for December delivery settled at 368.25 USD on Tuesday, this is -5.25 USD below Monday's settlement. With some 40,900 deals the traded volume (front month) was below average.

Neither the Stochastic indicator nor the RSI are giving off any clear signals this morning. However, buying signals would be generated if the lines of the Stochastic indicator sustainably cross and/or the RSI exceeds 30%. WTI on Tuesday settled below the lower Bollinger Band, favouring an upward correction that might push the contract back above this level. There is some slack up within the existing downtrends and so, these trends will remain intact even in case of a slight upward correction. Since there is potential for a short-term upward correction but the medium-term downtrends are still intact, we assess the technical constellation as neutral. If the Stochastic indicator and/or the RSI give fresh buying signals, the constellation could turn bullish in the course of the day, though.

U.S.

Nymex is above average: Oil futures have gained some ground in Asia and in electronic trade this morning bolstered by short-covering and the API's data on US crude oil stocks. After having hit fresh 7-year lows on Tuesday, prices have thus started slightly in the black this Wednesday. The traded volume at NYMEX is above average this morning. Investors are waiting for the European financial and forex markets to open today as well as for the release of some economic indicators. They will also keep a close eye on the release of the DOE's report on US petroleum stockpiles which is due at 4.30 p.m.

Forecast: Crude oil +0.5; Distillates +1.3; Gasoline +1.4 million barrels vs previous week.
API: Crude oil -1.9; Distillates +5.6; Gasoline +2.7 million barrels vs previous week.

Houston (ex-wharf indications 9-12)
380cst $173
180cst $253
MGO $427

New Orleans (ex-wharf indications 9-12)
380cst $187
180cst $243
MGO $436

Singapore (delivered indications 9-12)

Brent is crashing after the OPC meeting with -$0.40 for January contracts. Singapore paper is following with -$1.25 for 180cst with -$2.00 for 380cst for Dec, and for Jan 180 cst -$2.75 and 380cst with -$1.95 with MGO contracts Dec with -$0.48 and in Jan with -$0.45. The cargo market is down with 180cst -$9.88, 380cst with -$9.64 and MGO with -$2.89.

380cst $183
180cst $201
MGO $376

Fujairah (delivered indications 9-12)

380cst $190
180cst $230
MGO $595

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $163
MGO 0.1%S: $340