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Oil prices extended this week’s rout to hit levels not seen in more than a decade on Thursday, as mounting concerns over China’s economic outlook added to the view that a global supply glut may stick around for longer than anticipated.

ICE and NYMEX futures lost more ground at the beginning of the European session on Wednesday on technical movements in a fundamentally bearish market. Several support lines were breached already in the morning, analysts with UBS and Citigroup saying that they expect the WTI to hit the 30.00 USD in the course of the weeks to come. Despite a strong draw in U.S. crude stocks, as API and DoE data showed, oil prices extended their losses after their release. Selling pressure persisted until late in the evening on the stock market crash in China and the devaluation of the yuan when at the same time the world bank revised down its forecast of global economic growth. Oil futures thus settled considerably lower in London and New York, ICE futures hitting even fresh 11.5 year lows.

ICE Gasoil contract for January delivery settled at 314.75 USD on Wednesday, this is 14.50 USD below Tuesday's settlement. With some 47,500 deals, the traded volume (front month) was below average.

Selling pressure strongly rose on Wednesday, fostering an extension of oil's latest losses. By breaching the 34 dollar support the WTI dropped below its monthly low hit December 21, which opened more downside to prices at ICE and NYMEX. If the fall below Wednesday's low is another signal for a continuation of the fall in prices, neither RSI nor Stochastic has triggered any fresh signals yet. The WTI temporarily breached its 32.40 dollar support, a long time support last hit in December 2008. This support is now in the centre of attention of most technical analysts who expected this breach before a necessary upward correction can be triggered. Such a correction is also fostered by oil prices trading below their lower Bollinger Bands. And, after Tuesday's and Wednesday's hefty losses, traders this Thursday might tend to cover some of their short positions. We nevertheless consider the technical constellation as neutral to bearish today as we cannot exclude that the WTI hits its key support again.

U.S.

Nymex above average: Oil futures extended their losses in East Asia and Globex electronic trading this morning, weighed down by the hefty losses of Asian stock markets, the bearish data on U.S. petroleum inventories and by the world bank's downward revision of global economic growth. 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. And there are several economic indicators on the agenda today.

Forecast: Crude oil +0.3; Distillates +2.1; Gasoline +1.8 million barrels vs previous week.
DOE: Crude oil -5.1; Distillates +6.3; Gasoline +10.6 million barrels vs previous week.
API: Crude oil -5.6; Distillates +5.6; Gasoline +7.1 million barrels vs previous week.

Houston (ex-wharf indications 7-1)
380cst $140
180cst $212
MGO $367

New Orleans (ex-wharf indications 7-1)
380cst $169
180cst $229
MGO $375

Singapore (delivered indications 7-1)

Brent is down with -$3.12 for February contracts. Singapore paper is bearish with -$12.75 for 180cst with -$12.00 for 380cst for Jan, and for Feb 180 cst -$13.00 and 380cst with -$13.25 with MGO contracts Jan with -$3.10 and in Feb with -$3.12 .The cargo market is bullish with 180cst -$3.86, 380cst with -$5.58 and MGO with -$0.19.

380cst $173
180cst $177
MGO $328

Fujairah (delivered indications 7-1)

380cst $157
180cst $186
MGO $499

ARA (Amsterdam - Rotterdam - Antwerp)

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