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Oil prices were trading near 2016 highs this morning after the International Energy Agency said it expects the oil market to rebalance from oversupply by next year, provided there is no major economic downturn.

The end of the strike of oil workers in Kuwait and the API's bearish data on US oil inventories weighed on oil futures Wednesday morning. Whilst the technical constellation was neutral, not providing homogeneous cues, investors were awaiting the DOE's report on US petroleum stocks due Wednesday afternoon. The DOE's data were interpreted as bullish as it showed a high level of product demand and a renewed decline in US oil production. This sent oil futures higher. Oil futures broke above their key resistance near the 7-period moving average and the Stochastic indicator gave off a buying signal. Technical buying then accelerated the rise at oil markets which lasted through the night. Oil futures made up for Wednesday morning's losses, ending the day clearly in the black.

ICE Gasoil contract for May delivery settled at 386.75 USD on Wednesday, this was 8.25 USD above Tuesday's settlement. With some 62,300 deals, the traded volume (front month) was above average.

The lines of the Stochastic indicator crossed at NYMEX charts on Wednesday, confirming the buying signals that had already existed at the ICE charts. Wednesday's price rally has certainly spent some of the bullish potential and so the impact of the buying signals is already waning. Nonetheless, the Stochastic indicator remains bullish. The RSI is still hovering above 70%. If it drops below this mark, it might give off a fresh selling signal. However, oil futures this morning exceeded Wednesday's highs. They had already surpassed the 7-period moving average on Wednesday, generating more potential up to the upper Bollinger Band. Since the Stochastic indicator still has a residual impact on prices, we assess the technical constellation as slightly bullish, with the RSI possibly providing some bearish potential. The constellation thus isn't very stable, which is why oil futures might be rather volatile.

U.S.

Nymex above average: Oil futures kept track of Wednesday's gains in Asian trading and Globex electronic trading this morning, fostered by the slightly bullish technical constellation. They have meanwhile exceeded Wednesday's highs, generating more upward potential. The traded volume at NYMEX is far above average this morning. Market participants are waiting for the European financial and forex markets to open as well as for the economic indicators due today. Moreover, they are eying the ECB's meeting.

Forecast: Crude oil +2.0; Distillates ±0.0; Gasoline -1.5 million barrels vs previous week.
DOE: Crude oil +2.1; Distillates -3.6; Gasoline -1.0 million barrels vs previous week.
API: Crude oil +3.1; Distillates -2.5; Gasoline -1.0 million barrels vs previous week.

Houston (ex-wharf indications 21-4)
380cst $169
180cst $292
MGO $394

New Orleans (ex-wharf indications 21-4)
380cst $184
180cst $228
MGO $385

Singapore (delivered indications 21-4)

Brent is gaining with +$2.48 for June contracts. Singapore paper is up with +$12.80 for 180cst with +$18.80 for 380cst for May, and for June 180cst +$10.65 and 380cst with +$12.45 with MGO contracts May with +$3.57 and in June with +$3.50. The cargo market is bullish with 180cst +$0.77, 380cst with +$1.34 and MGO with x$0.00

380cst $192
180cst $197
MGO $358

Fujairah (delivered indications 21-4)

380cst $186
180cst $194
MGO $429

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $178
MGO 0.1%S: $353