---

Brent oil sank to the lowest level since July 2004 on Monday, as ongoing jitters over a global supply glut drove down prices.

Market fundamentals remained bearish Friday morning. The builds in US oil inventories reported Wednesday by the DOE, the increase in crude oil stockpiles in Cushing (Genscape) and the lift of the export ban on US crude oil provided hardly any reasons to believe in an upward correction at oil markets. In the past weeks prices were only frequently buoyed by the rather steady gasoline demand in USA. Along with the bearish fundamentals, the rather bearish technical constellation also weighed on oil futures on Friday as the Stochastic indicator had given selling signals earlier last week. However, we warned of short-coverings on Friday morning. Like expected, investors tried to cut their riskier positions ahead of the Christmas holidays liquidating the short positions they had raised in the days before. Whilst this fostered oil prices in the first half of the day, the bearish factors took the upper hand again Friday afternoon. Volatility at oil markets increased and WTI dropped down to its key support between 34.30 and 34.40 USD. However, this support remained strong despite several tests. That is why many traders covered their short positions, pushing prices higher. Even so, most traders and analysts don't believe in a sustainable rally at this point in time. That is why oil prices lost ground again on Friday evening. The Baker Hughes rig count, released after our office hours, added to selling pressure, even pushing WTI down to a fresh low.

ICE Gasoil contract for January delivery settled at 343.50 USD on Friday, this is +7.50 USD above Thursday's settlement. With some 64,900 deals, the traded volume (front month) was above average.

The Stochastic indicator is unable to provide any fresh selling signals at the Brent and the WTI chart. The lines of the indicator no longer diverge. This shows that the bearish potential of the Stochastic indicator has been largely spent by now. The indicator might give off a fresh signal at the Gasoil chart, however, if its lines cross in the course of the day.. Brent has already dropped below Friday's low earlier this morning. This has generated fresh downside for the North Sea crude oil contract. By falling to 36.17 USD, Brent even hit a fresh 11-year-low. However, this means that the key support at 36.20 USD hasn't been sustainably breached. That is why we are still assessing the technical constellation as neutral to bearish. One has to keep in mind though that market players might cover some of their short-positions now and again ahead of the Christmas holidays.

U.S.

Nymex is above average: Oil futures tested their downside in electronic trade this morning, weighed down by the Baker Hughes report on the number of active US oil rigs as well as by the lift of the export ban on US crude oil. The traded volume at NYMEX is above average this morning. Market players are already focusing on the NYMEX Crude Oil contract with delivery in February. The January contract is going to expire at 8.30 p.m. tonight. Investors are waiting for the European financial and forex markets to open today as well as for the release of some economic indicators.

Houston (ex-wharf indications 21-12)
380cst $145
180cst $221
MGO $358

New Orleans (ex-wharf indications 21-12)
380cst $197
180cst $251
MGO $383

Singapore (delivered indications 21-12)

Brent is down with -$1.12 for December contracts. Singapore paper is bearish with -$6.75 for 180cst with -$6.20 for 380cst for Jan, and for Feb 180 cst -$6.50 and 380cst with -$7.00 with MGO contracts Jan with -$0.07 and in Feb with -$0.32 .The cargo market is bearish with 180cst -$0.49, 380cst with -$0.84 and MGO with +$0.16.

380cst $163
180cst $178
MGO $328

Fujairah (delivered indications 21-12)

380cst $163
180cst $197
MGO $596

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $153
MGO 0.1%S: $303