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U.S. oil futures tumbled this morning, as investors grew cautious ahead of this weekend’s highly anticipated meeting between major oil producers in Doha, Qatar, to discuss a potential output freeze..

Oil futures initially traded in a narrow range Friday morning. Market fundamentals and the technical constellation were considered neutral as fresh cues were lacking. In the course of the morning the bearish aspects gained the upper hand, though. Oil futures tested their downward potential, weighed down by reports on Iran's increasing oil exports in April. Moreover, Iran's oil minister Bijan Zanganeh said he would not join the Doha-talks personally. This raised skepticism over a potential deal between the most important oil producers during the meeting in Doha on Sunday (April 17). Oil futures remained soft until Friday evening. However, late Friday evening, oil prices saw a light upward correction. Ahead of the producer meeting markets remained nervous and traders avoided too large short positions as there was still a small possibility of producers coming to terms over an output freeze. This short-covering slightly buoyed oil prices. Nonetheless, oil futures ended the day clearly in the red. The lines of the Stochastic index are drifting apart again. That is why the indicator has a bearish bias. The RSI has dropped below 70% at the ICE and NYMEX charts, giving off a selling signal. The lines of the 7-period and the 21-period moving averages are losing their bullish impact. The bearish cues of the RSI and the Stochastic indicator are dominating which is why we assess the technical constellation as bearish, favoring further downward moves.

ICE Gasoil contract for May delivery settled at 364.50 USD on Friday, this was 12.25 USD below Thurssday's settlement. With some 79,600 deals, the traded volume (front month) was above average..

Hopes on an accord between oil producers in- and outside the OPEC over an output freeze were the main driver for the price increase oil markets have seen since mid-February. That is why prices slumped after no deal was reached on Sunday. The fact that the talks between important oil producers have failed has a psychological effect in the first place for a deal wouldn't have put an immediate end to oversupplies anyway. By implication the lack of a deal won't delay a rebalance of supply and demand either. Still, the outcome of the talks in Doha provides bearish cues as the OPEC clearly lost credibility and as it has become increasingly unlikely that supplies might be reculated in the near term. From now on, market players have to count on a decline in oil production in countries like the USA, where output is already significantly shrinking. According to the EIA, US oil production is to hit a level of 8.11 mbpd by September. The number of active US oil rigs renewedly declined by 3 last week to 351 rigs, Baker Hughes reported in its rig count. Experts are still disagreeing on how quickly the oil market will rebalance against the backdrop of the decline in output in the USA and other countries. Most of them, like the EIA, think that the market will rebalance no sooner than by mid-2017. However, analysts at Energy Aspects expect that demand might already outpace supplies in June. After a first downward reaction to the outcome of the Doha-talks, oil prices have meanwhile slightly pulled back from their lows. They are buoyed by a strike of oil workers in Kuwait which allegedly made the country's oil output shrink to 1.1 bpd as well as by the fact that the lack of a deal between oil producers doesn't directly impact on supplies on the physical oil market. Expectations of a decline in US oil production are also supporting prices. According to analyst Abhishek Deshpande at Natixis, oil prices might still drop down to 30 USD in the coming days due to the lacking deal over an output freeze. Despite their recovery, oil futures remain clearly in the red this morning.

U.S.

Nymex above average: In Asian trading and Globex electronic trade this morning oil futures slightly recovered from the hefty losses they had hit last night. They were fostered by unplanned output losses in Kuwait. The traded volume at NYMEX is far 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.

Houston (ex-wharf indications 18-4)
380cst $159
180cst $289
MGO $375.50

New Orleans (ex-wharf indications 18-4)
380cst $180
180cst $229
MGO $376.50

Singapore (delivered indications 18-4)

Brent is losing sharply with -$2.12 for June contracts. Singapore paper is following with -$12.25 for 180cst with -$11.75 for 380cst for May, and for June 180cst -$11.75 and 380cst with -$12.50 with MGO contracts May with -$1.98 and in June with -$2.05. The cargo market is yet to really embrace the drops with 180cst -$2.08, 380cst with -$1.38 and MGO with -$0.03.

380cst $193
180cst $179
MGO $351

Fujairah (delivered indications 18-4)

380cst $188
180cst $193
MGO $427

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $175
MGO 0.1%S: $342