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Oil prices rose around one percent this morning, bouncing off 11-year lows as investors closed bearish positions ahead of the year-end holiday but the global oversupply picture capped gains.

On Monday morning, Brent kicked off the week by hitting a fresh 11-year-low. This indicated further tests of the downside. The situation in general is rather bearish anyway, with the Baker Hughes rig count (Friday) adding to the bearish market fundamentals. That is why oil futures tended to the downside on Monday morning although fresh losses immediately prompted investors to cover their short-positions. We had already cautioned in our early morning report that trading might become more volatile on Monday as many traders might try to consolidate their risks ahead of the Christmas holidays, largely by cutting their bets on a decline in oil prices. Even so, oil futures frequently tested their downside until WTI hit a fresh 7-year-low. The update of data provider Genscape's forecast on crude oil stockpiles in Cushing, Oklahoma weighed on oil prices in the afternoon. According to Genscape, crude oil stocks in Cushing rose by 1.6 million barrels in the week ending Friday 18. Even though - by falling to 33.98 USD - WTI dropped below a long-term support, no fresh downward potential was generated ahead of the expiry of the January contract. Traders rolled their short positions over to contracts due later next year, raising their buying orders with the January WTI contract. Late in the evening, WTI renewedly regained ground, dragging oil futures traded on the ICE higher as well.

ICE Gasoil contract for January delivery settled at 329.00 USD on Monday, this is -14.50 USD below Friday's settlement. With some 58,000 deals, the traded volume (front month) was about on average.

After Monday evening's upward move, the lines of the Stochastic indicator crossed at the WTI chart. The indicator thus gave off a buying signal. At the Brent and the Gasoil charts, the Stochastic indicator hasn't given any confirming buying signals yet. If the lines of the indicator cross at these charts, too, oil prices would gain more traction in the course of the day. The WTI candlestick chart shows a bullish hammer candle. However, the technical signals which can be seen at the WTI chart are in part due to the expiry of the January WTI contract Monday evening. That is why we are still assessing the technical constellation as neutral this morning. If the Stochastic indicator confirms the buying signal at the Brent and the Gasoil charts, further upward potential is likely to be generated.

U.S.

Nymex is above average: Oil futures are slightly buoyed by technical factors in electronic trade this morning. Short-Coverings become more and more likely ahead of the Christmas holidays. This favours some tests of the upside despite the bearish market fundamentals. The traded volume at NYMEX is far above average this morning. Market players are waiting for the European financial and forex markets to open today as well as for the release of a raft of economic indicators. Tonight at 10.30 p.m. the API will release its data on US oil inventories.

Houston (ex-wharf indications 22-12)
380cst $145
180cst $222
MGO $359

New Orleans (ex-wharf indications 22-12)
380cst $199
180cst $246
MGO $376

Singapore (delivered indications 22-12)

Brent is up with +$0.43 for December contracts. Singapore paper is bullish with +$2.70 for 180cst with +$2.25 for 380cst for Jan, and for Feb 180 cst +$2.65 and 380cst with +$2.50 with MGO contracts Jan with +$0.16 and in Feb with +$0.16 .The cargo market is bearish with 180cst -$7.44, 380cst with -$5.79 and MGO with +$0.15.

380cst $160
180cst $175
MGO $326

Fujairah (delivered indications 22-12)

380cst $161
180cst $198
MGO $596

ARA (Amsterdam - Rotterdam - Antwerp)

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