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Oil prices fell on Wednesday after Saudi Arabia's oil minister appeared to rule out an oil production freeze ahead of Sunday’s meeting of major producers in Doha.

Investors stayed on the sidelines Tuesday morning as neither the technical constellation nor market fundamentals provided fresh cues. In the course of the morning oil futures eventually gained some ground as a report of the EIA said that US shale oil output could drop to the lowest level since summer 2014 in May. Since the EIA's monthly energy report was due Tuesday evening, this bolstered oil prices, the more so as oil markets are still susceptible to short covering. In the early afternoon oil futures consolidated on a high level before rallying in early US trade. The Russian news agency Interfax reported that Russia and Saudi Arabia had already in the run-up to the producer meeting agreed upon freezing output. Oil futures unsurprisingly soared on this news, triggering more technical buying. Whilst Gasoil failed to exceed its 2016 high at 381.00 USD hit in March, Brent and WTI hit fresh 4.5-month highs. In the evening the EIA's monthly energy report came in clearly bullish, sending oil prices further up. The API's bearish data on US oil inventories put an end to the rally, though.

ICE Gasoil contract for May delivery settled at 376.00 USD on Tuesday, this was 13.75 USD above Monday's settlement. With some 121,300 deals, the traded volume (front month) was far above average.

The lines of the Stochastic indicator are converging at the ICE and NYMEX charts. They are still in overbought territory. That is why indicator doesn't have any bullish impact any longer. If the lines cross, the Stochastic indicator might even give a selling signal. The RSI is in overbought territory, too. Since the indicator is already showing a slight downward move and already is interpreted as slightly bearish, it would favour a downward correction of oil prices. In addition to this, WTI has approached the highest level it has posted so far in 2016. On Tuesday, the US crude oil contract has even briefly exceeded this level but the upper Bollinger Band capped the rise. In all, we assess the technical constellation as neutral to bearish. A considerable downward correction seems possible only if the Stochastic indicator gives off a clear selling signal.

U.S.

Nymex above average: Oil futures remained unchanged in Asian trading this morning but are currently edging lower in Globex electronic trade, weighed down by the API's bearish inventories data. The traded volume at NYMEX is above average this morning. Investors are waiting for the European financial and forex markets to open as well as for the economic indicators due today. They are also eying further comments on the meeting of important oil producers in Doha, the OPEC's monthly energy report and the DOE's data on US oil inventories..

Forecast: Crude oil +1.8; Distillates +0.2; Gasoline -1.5 million barrels vs previous week.
API: Crude oil +6.2; Distillates -0.5; Gasoline -1.6 million barrels vs previous week.

Houston (ex-wharf indications 13-4)
380cst $168
180cst $290
MGO $372

New Orleans (ex-wharf indications 13-4)
380cst $183
180cst $224
MGO $374

Singapore (delivered indications 13-4)

Brent is possibly losing momentum temporarily with +$0.56 for Apr contracts. Singapore paper is following with +$1.70 for 180cst with +$2.55 for 380cst for Apr, and for May 180cst +$2.55 and 380cst with +$3.25 with MGO contracts Apr with +$0.29 and in May with +$0.30. The cargo market is now adopting the bullishness with 180cst +$9.14, 380cst with +$8.20 and MGO with +$2.71..

380cst $179
180cst $185
MGO $336

Fujairah (delivered indications 8-4)

380cst $178
180cst $184
MGO $424

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $188
MGO 0.1%S: $363