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Oil prices gave back some of the prior session’s strong gains in Europe trade on Tuesday, as investors shifted their focus back to concerns over a global supply glut and slowing global demand.

Despite the slightly bearish market fundamentals and the technical constellation, oil futures in London and New York were able to post gains on Monday. Oil markets were rather volatile due to the expiry of the WTI contract with March delivery (Monday evening). Investors tended to cover their short-positions after Friday's losses and so oil futures had already tested short-term resistances in the early morning. The release of the IEA's medium-term oil market report and oil futures' break above Friday's highs accelerated the price increase in the afternoon. The IEA expects a rapid decline of the US oil production. On Friday evening the Baker Hughes rig count had already taken investors by surprise by showing a sharp decline in the number of active US oil rigs. According to the IEA, the oil market will rebalance by 2017. In 2018, even a shortage of 0.4 mbpd is expected. Market participants reacted sensitively on the news, covering their short-positions. Saudi Arabia's oil minister meanwhile hopes that the (possible) output freeze will be followed by further effective measures to reduce supplies. Against the backdrop of the imminent expiry and the higher volatility of the March WTI contract WTI rose particularly sharply, sending the other futures higher as well. However, the rise at oil markets was capped by Brent's resistance at 35 USD, which remained strong despite several tests.

ICE Gasoil contract for March delivery settled at 317.25 USD on Monday, this was 9.50 USD above Friday's settlement. With some 64,700 deals, the traded volume (front month) was above average.

The bearish bias of the Stochastic indicator has slightly eased after Monday's price increase but it hasn't completely waned yet. At the Gasoil chart the indicator has even dropped back below 50%, renewedly confirming the bearishness of the indicator. However, the RSI has exceeded 70% at the WTI chart. If it fell back below this level, the indicator would give off a selling signal. This has already been the case at the Brent chart, providing a bearish cues. From a merely technical perspective, we are still assessing the situation as neutral to bearish, although there are no clear cues yet. At the Brent and the WTI chart technical triangles have developed which are likely to set the trading range.

U.S.

Nymex above average: Oil futures edged lower in early electronic trading this morning, erasing some of Monday's gains. The traded volume at NYMEX is above average this morning. Market participants are now waiting for the European financial and forex markets to open as well as for the release of some economic indicators, and the release of the API's report on US oil inventories (at 10.30 p.m.).

Houston (ex-wharf indications 23-2)
380cst $140
180cst $213
MGO $337

New Orleans (ex-wharf indications 23-2)
380cst $142.50
180cst $185
MGO $324

Singapore (delivered indications 23-2)

Brent is gaining with +$0.25 for Apr contracts. Singapore paper is down with -$0.75 for 180cst with -$0.55 for 380cst for Mar, and for Apr 180cst -$2.50 and 380cst with -$2.50 with MGO contracts Mar with +$0.12 and in Apr with +$0.13 .The cargo market is reacting now to the losses on paper with 180cst -$6.09, 380cst with -$6.51 and MGO with -$0.44.

380cst $155
180cst $160
MGO $296

Fujairah (delivered indications 23-2)

380cst $153
180cst $175
MGO $417

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $142
MGO 0.1%S: $301