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Oil prices struggled for direction in choppy trade during European morning hours on Wednesday, as market players looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world's largest oil consumer.

The situation at the oil market was largely unchanged Tuesday morning. Market players were still expecting a sharp decline in US oil output that might reign in oversupplies. Moreover, hopes on an OPEC output freeze on January levels lingered. The rally oil prices had seen in the past view days still sent oil futures higher until early Tuesday morning. However, we cautioned in our technical analysis on Tuesday morning that prices might have climbed too high too quickly although there hadn't been any bearish signals yet. When Brent rose above 41 USD, oil prices erased their gains. The sharp decline in Chinese in- and exports, Kuwait's warning not to take part in output limitations if other OPEC-members don't and the expectation of builds in US crude oil stockpiles prompted investors to take some profits in the afternoon. Traders who had bet on rising prices earlier this week locked in some profits and so oil futures soon shed most of the gains posted in the first half of the day. In the early evening the EIA released its monthly energy report, which came in bearish. The API's data on US oil inventories provided mixed cues instead. Oil markets renewedly edged lower on the data but losses remained limited as the traded volumes were rather low at that time. Oil futures eventually ended the day in the red. The steep uptrend which had formed at the beginning of the week flattened.

ICE Gasoil contract for March delivery settled at 359.75 USD on Tuesday, this was 4.75 USD above Monday's settlement. With some 52,400 deals, the traded volume (front month) was below average.

The uptrend at ICE and NYMEX became steeper over the past two days, remaining intact. However, the lines of the Stochastic indicator have already crossed at the Brent and the WTI chart, giving a selling signal. Overall, the oil market is deeply in overbought territory, favouring a downward reaction. The selling signals of the Stochastic indicator might herald a downward correction. As long as oil futures don't break below the supports of their uptrends, we assess the technical constellation as neutral to bearish. If the Stochastic indicator confirms the selling signal at the Gasoil chart in the course of the day and the RSI drops back below 70%, oil futures might approach the 7-period moving average. This would generate fresh potential down to the 21-period moving average..

U.S.

Nymex above average: After Tuesday evening's losses, oil futures at ICE and NYMEX ticked higher in electronic trading this morning. Still oil futures remain near Tuesday's lows. They are weighed down by the expectations of another rise in US crude oil inventories. 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 for the release of the economic indicators due this Tuesday. Besides, the DOE will release its report on US petroleum stockpiles at 4.30 p.m. this afternoon.

Houston (ex-wharf indications 9-3)
380cst $163
180cst $313
MGO $367

New Orleans (ex-wharf indications 9-3)
380cst $169
180cst $215
MGO $358

Singapore (delivered indications 9-3)

Brent is bearish with -$0.77 for Apr contracts. Singapore paper is down with -$1.25 for 180cst with -$1.25 for 380cst for Mar, and for Apr 180cst -$0.50 and 380cst with -$1.20 with MGO contracts Mar with -$0.52 and in Apr with -$0.54 .The cargo market is up with 180cst +$7.98, 380cst with +$6.96 and MGO with +$1.79.

380cst $178
180cst $185
MGO $346

Fujairah (delivered indications 9-3)

380cst $182
180cst $201
MGO $424

ARA(Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $173
MGO 0.1%S: $363