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Oil prices edged lower in volatile trade for the second straight day this morning, as ongoing concerns over a global supply glut outweighed heightened geopolitical tension between Saudi Arabia and Iran.

Oil futures on the ICE and NYMEX kicked off this week on a steadier note. On Monday morning, traders priced in a risk premium against the backdrop of the tensions between Iran and Saudi Arabia. In the course of the morning oil futures failed to defend their gains, though. Chinese equities slumped, prompting the country's central bank to suspend trading as volatility was too high. Oil futures kept track of this decline, the more so as the Chinese purchasing manager index fell short of expectations. However, the decline in oil prices was short-lived as well. Around noon and in late-afternoon trading oil prices in London and New York surged to new highs. They were sent higher by news on attacks against oil terminals in Eastern Libya, the tensions in the Middle East and an alleged draw in Cushing crude oil stockpiles. The bullish technical constellation favored the price increase. Gains were capped by the strong resistances at 38.30 USD WTI and 39.00 USD Brent. The strong resistances triggered yet another price slump. According to another set of data provided by Genscape, crude oil inventories in Cushing, Oklahoma, are to have increased. Moreover, some experts expect that the increasing tensions between Saudi Arabia and Iran will lead to an exacerbation of the supply glut in the course of this year. Traders who were absent between Christmas and New Year are now returning from the holidays. Still, the traded volume remained below average on Monday as investors only started to increase their riskier positions. This added to volatility. At last, the bearish fundamentals outweighed the bullish cues provided by the technical constellation and the tensions in the Middle East.

ICE Gasoil contract for January delivery settled at 328.00 USD on Monday, this is +1.75 USD above Thursday's settlement. With some 44,600 deals, the traded volume (front month) was below average.

The Stochastic indicator is giving off mixed cues this morning. Whilst the indicator is still bullish at the Brent chart, its lines have crossed at the Gasoil chart earlier this morning, providing a fresh buying signal. The buying signal the Stochastic indicator gave off at the WTI chart on Monday has meanwhile waned. In the course of the day, the indicator might even give off a selling signal at the US crude oil chart. If the Stochastic indicator exceeds 50% at the Brent chart, however, the bullish tendency would be confirmed. Corresponding to the mixed cues of the Stochastic indicator, oil futures dropped back below the 7-period moving averages this morning, indicating further downward slack. We assess the technical constellation as neutral this morning as there might be bullish (Stochastic at the Brent chart) as well as bearish cues (Stochastic WTI chart) in the course of the day. As we already mentioned on Monday, the technical constellation is likely to have but little impact on oil futures, anyway, as traders are coming back from the Christmas holidays, raising their riskier positions.

U.S.

Nymex above average; After Monday's sharp price swings, oil futures struggle to find a direction in electronic trading this morning. They are still trading in a rather narrow range above Monday's lows. 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 news regarding the tensions between Iran and Saudi Arabia. Moreover, there are several economic indicators and the API's report on US oil inventories on the agenda today.

Houston (ex-wharf indications 5-1)
380cst $151
180cst $222
MGO $373

New Orleans (ex-wharf indications 5-1)
380cst $181
180cst $238
MGO $381

Singapore (delivered indications 5-1)

Brent is down with -$0.23 for February contracts. Singapore paper is bearish with -$3.25 for 180cst with -$3.50 for 380cst for Jan, and for Feb 180 cst -$3.75 and 380cst with -$3.25 with MGO contracts Jan with -$0.20 and in Feb with -$0.17 .The cargo market is bullish with 180cst +$6.64, 380cst with +$7.90 and MGO with -$0.09.

380cst $180
180cst $183
MGO $328

Fujairah (delivered indications 5-1)

380cst $163
180cst $208
MGO $511

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $148
MGO 0.1%S: $303