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The technical constellation favored tests of the downside Monday morning. That is why oil futures fell to the 7-period moving averages. These supports proved strong and so, the downward potential remained limited. In terms of market fundamentals, news on rising OPEC output weighed on oil futures but the advancing euro/dollar prevented a sharper decline in prices in the morning and so oil futures bounced off their key supports, climbing to new highs. However, oil futures renewedly lost ground in late-afternoon trading, with WTI taking the lead. Data provider Genscape reported a surprisingly sharp increase in Cushing crude oil stockpiles, renewedly bringing bearish aspects into focus. WTI thus dropped below the 7-period moving average, which had remained strong until then, but it failed to break below this support sustainably. Brent and Gasoil stayed above the 7-period moving average on Monday but still the contracts settled in the red. The selling pressure of the Stochastic indicator has eased compared to Monday as the lines of the indicator are no longer diverging that sharply. The indicator is only clearly bearish at the Gasoil chart. The RSI is no longer retreating, stabilising in neutral territory. That is why the bearish bias of the RSI is also waning. The support near the 7-period moving average remained strong at the ICE charts. It will renewedly serve as a key-support this Tuesday. WTI but briefly dropped below this level which is why the contract might find support near this price level, too. Since selling pressure has eased we assess the technical constellation as neutral to bearish. If oil futures sustainably drop below the 7-period moving averages and below Monday's lows, selling pressure would rise again.

ICE Gasoil contract for May delivery settled at 393.00 USD on Monday, this was 2.75 USD below Friday's settlement. With some 41,200 deals, the traded volume (front month) was below average.

If the oil market is still somewhat bullish, the additionnal barrels the OPEC is expected to throw on the global market will severely harm oil's recovery, experts such as Tim Evans, analyst with Citi Futures, say. Global oil supply will rise consideraby if Libya succeeds in exporting more oil after the first cargo left a Liyan port yesterday, if the damaged Nigerian pipelines are being repaired, if Iran hits its output target of 4.0 mbd and Kuwait and Saudi Arabia manage to increase output by 150.000 bd and 250.000 bd respectively. Morgan Stanley experts expect that all these countries together have an additionnal potential of about 1.0 mbd. These barrels could be thrown on the market before June this year. According to the IEA OPEC production would then stand at about 33.5 mbd. Citigroup analysts regard the competition between Iran and Saudi Arabia as the most bearish risk for oil as Ryadh will hardly watch Tehran increase its production without doing nothing. Saudi Arabia, currently producing about 10.3 mbd, has the potential to increase its output beyond the 11 mbd mark. If signs of an increase in OPEC production should increase or expectations even be fulfilled, this would be clearly bearish for the oil market. But so far the impact of the news is limited as traders, as usual, today are waiting for the release of the weekly reports of API (tonight) and DoE (tomorrow) on U.S. oil reserves. According to the monitoring and research company Genscape, Cushing reserves increased by about 1.5 million barrels last week. Even if such a high rise in stocks, should it indeed be reported, is presumably due to unplanned refinery outages and thus probabely a one-off effect, it would certainly weigh on the WTI. Nationwide crude stocks are expected to have increased by only about 0.8 mbd, while gasoline reserves should have declined by 1.3 mbd. While the API's data are released tonight, traders will be more focussed on the official DoE data on Wednesday that also inform about U.S. production that is expected to have dropped further.

U.S.

Nymex above average: Oil futures tested Monday's lows in Asian trading and Globex electronic trading this morning. However, they have failed to sustainably break below these levels so far. 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, the API's report on US oil inventories is due at 10.30 p.m. tonight.

Houston (ex-wharf indications 26-4)
380cst $173
180cst $291.50
MGO $396

New Orleans (ex-wharf indications 26-4)
380cst $193.50
180cst $234
MGO $395

Singapore (delivered indications 26-4)

Brent is barely moving up slightly +$0.09. Singapore paper is more bullish though with +$0.95 for 180cst with +$1.50 for 380cst for May, and for June 180cst +$1.80 and 380cst with +$0.50 with MGO contracts May with +$0.22 and in June with +$0.15. The cargo market is starting to turn with 180cst +$0.91, 380cst with -$0.60 and MGO with -$0.23.

380cst $205
180cst $210
MGO $388

Fujairah (delivered indications 26-4)

380cst $205
180cst $211
MGO $429

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $185
MGO 0.1%S: $368