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WTI oil futures rebounded from the prior session’s steep decline in Europe trade this morning, amid speculation weekly supply data due later in the session will show U.S. crude inventories rose at a slower pace than expected last week.

Market fundamentals as well as the technical constellation were bearish on Tuesday morning. Market participants were eying the release of the IEA's monthly energy report later on Tuesday morning which came in bearish. However, oil futures lost ground only later in the day as investors had already expected a bearish report due to the return of Iranian crude oil on the global market. Moreover, the technical key supports at 32.85 USD Brent and at 29.50 USD WTI remained strong. In the afternoon, oil futures broke below these supports, though. Analysts at Goldman Sachs even don't exclude any longer that oil prices might fall below 20 USD in the course of 2016 and the expectations of bearish data on US oil inventories also weighed on oil futures. Tuesday evening, the EIA's monthly energy report added to selling pressure. In addition to this, Kuwait announced it would raise its oil production in the course of this year. Late in the evening, the API's report came in bearish, too. This market environment, along with the bearish technical constellation, put prices under pressure until late in the evening. Oil futures thus settled near their lows.

ICE Gasoil contract for February delivery settled at 287.00 USD on Tuesday, this was 17.50 USD below Monday's settlement. With some 32,100 deals, the traded volume (front month) was below average.

Oil futures have meanwhile clearly broken below their lateral trend. After the Stochastic indicator and the RSI had already given off selling signals on Tuesday morning, oil futures dropped below key supports. In addition to this, the lines of the 7- and 21-period moving average crossed at the WTI chart, generating a bearish signal. For the time being, the Stochastic indicator and the RSI can't give any further selling signals. Tuesday's losses generated more downward potential, which is why oil futures might head for the lows hit in January. After hefty losses like those oil futures saw on Tuesday, investors usually tend to cover some of their short positions. The bearish technical bias remains but as there are no fresh cues, we assess the technical constellation as neutral to bearish.

U.S.

Nymex above average: Oil futures stayed near Tuesday's lows in Asia and early electronic trading this morning but hovered slightly above these levels. The traded volume at NYMEX is above average this morning. Investors are now waiting for the European financial and forex markets to open as well as on the economic indicators which are on the agenda today. Moreover, they are waiting for the OPEC's monthly energy report due in the early afternoon and for the DOE's data, which is to be released at 4.30 p.m.

Forecast: Crude oil +3.7; Distillates -0.9; Gasoline +1.0 million barrels vs previous week.
API: Crude oil +2.4; Distillates +1.7; Gasoline +3.1 million barrels vs previous week.

Houston (ex-wharf indications 10-2)
380cst $142
180cst $205
MGO $338

New Orleans (ex-wharf indications 10-2)
380cst $147
180cst $189
MGO $331

Singapore (delivered indications 10-2)

Brent is now dropping after the overdone with -$3.39 for Apr contracts. Singapore paper is following with -$16.50 for 180cst with -$16.95 for 380cst for Feb, and for Mar 180cst -$17.50 and 380cst with -$3.39 with MGO contracts Feb with -$3.39 and in Mar with -$3.36 .The cargo market is losing with 180cst -$4.78, 380cst with -$3.36 and MGO with -$0.80.

380cst $166
180cst $172
MGO $284

Fujairah (delivered indications 10-2)

380cst $158
180cst $178
MGO $432

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $150
MGO 0.1%S: $290