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Oil prices fell this morning as growing pessimism over a deal between major producers to rein in oversupply and a larger than expected U.S. inventory build weighed on prices.

After Tuesday's price rally oil futures opened on a softer note on Wednesday morning. The EIA's bullish monthly energy report buoyed oil prices but the API's data on US oil inventories released Tuesday night limited the upward potential. The technical constellation even indicated more downward potential. However, those factors at first failed to prevail against the slightly bullish market fundamentals. The OPEC's monthly energy report didn't bring any big surprises and so it didn't have a lasting effect on oil prices. Traders thus waited for the release of the DOE's data on US oil inventories, due in the afternoon. The DOE's report showed massive builds in US crude oil stockpiles. That is why it was interpreted as bearish. The high level of US gasoline demand and the draw in gasoline stocks at first pushed oil futures higher but eventually the bearish aspects outweighed the bullish ones. Oil futures thus ended the day in the red.

ICE Gasoil contract for May delivery settled at 377.00 USD on Wednesday, this was 1.00 USD above Tuesday's settlement. With some 89,500 deals, the traded volume (front month) was above average.

The lines of the Stochastic indicator have crossed at the WTI, Brent and Gasoil chart. That is why the indicator is bearish. The RSI has climbed once again, hovering above 70% at the Brent and the WTI chart. If the indicator drops back below this level, a fresh selling signal would be triggered, see also technical analysis. Moreover, a double top has formed at the WTI chart. It is limiting upward potential and favouring tests of the downside. However, the fact that the 7-period and the 21-period moving averages have crossed is a buying signal, bolstering prices. Nonetheless, the bearish technical aspects are currently predominating, the more so as oil futures have already dropped below Wednesday's lows, generating more downward potential. In all, we thus assess the technical constellation as slightly bearish.

U.S.

Nymex above average: Oil futures have already dropped below Wednesday's lows in Asian trading and in Globex electronic trade this morning, weighed down by the slightly bearish technical constellation. The traded volume at NYMEX is above average this morning. Market players are waiting for the European financial and forex markets to open as well as for the economic indicators due today (see economic calendar). They are also eying further comments on the meeting of important oil producers in Doha and the IEA's monthly energy report.

Forecast: Crude oil +1.8; Distillates +0.2; Gasoline -1.5 million barrels vs previous week.
DOE: Crude oil +6.6; Distillates +0.5; Gasoline -4.2 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 14-4)
380cst $170
180cst $295
MGO $374

New Orleans (ex-wharf indications 14-4)
380cst $188
180cst $224
MGO $391

Singapore (delivered indications 14-4)

Brent is possibly losing momentum temporarily with -$0.50 for Apr contracts. Singapore paper is following with -$2.00 for 180cst with -$2.25 for 380cst for Apr, and for May 180cst -$1.25 and 380cst with -$1.25 with MGO contracts Apr with -$0.55 and in May with -$0.43. The cargo market is up with 180cst +$0.48, 380cst with +$0.79 and MGO with +$1.01..

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