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Crude oil drifted lower in Asia this morning ahead of the long Memorial Day weekend in the U.S. as investors stay cautious ahead of next week's OPEC meeting in Vienna and U.S. rig count data from Baker Hughes later in the day.

After having registered gains each day of the week in London and New York, the Brent and the WTI on Thursday tried their crucial 50 dollar resistance which was eventually breached on technical movements and a bullish fundamental market situation. The strikes in France, fresh production outages in Nigeria, the draw in U.S. crude stocks and the Stochastic's buying signal lent some support. But, as the 50 dollar mark was breached, traders hesitated to go long any further and opted for profit taking instead. Before the long weekend in the U.S. (financial places are closed due to Memorial Day on Monday), they were not prepared to take any more risks. Expectations of an early return of the Canadian oil sand production to the market and sales generated by hedge funds applied an additional pressure in the afternoon. Oil prices thus extended their losses during NYMEX session and eventually settled lower in London and New York.

ICE Gasoil contract for June delivery settled at 448.25 USD on Thursday, this was 0.75 USD above Wednesday's settlement. With some 43,700 deals, the traded volume (front month) was below average.

After oil prices reached fresh year highs on Thursday the RSI generated selling signals at the ICE and NYMEX charts this morning by descending below its 70 line. At the gasoil chart the Stochastic indicator also triggered a selling signal upon the crossing of its two lines, thus reinforcing the RSI signal and opening more downside. Yet at the Brent and the WTI chart the indicators lines have not yet crossed and no selling signals have been triggered yet. By hitting fresh year highs a divergence has formed between the existing uptrend and the RSI and Stochastic indicators at all charts which also favours a technical downward correction. The WTI's candlestick chart shows a spinning top, or Doji which is a clear sign for a reversing tendency. Should the oil futures settle lower today this formation will be confirmed and fresh downside would be opened. We therefore consider the technical constellation as bearish this morning and would like to point out that the MA7's could be tested and more technical selling orders would be triggered once it was breached to the downside.

U.S.

Nymex on Average: Oil futures extend their losses in East Asia and NYMEX electronic trading this morning, descending below Thursday's lows and thus opening up more downside. The traded volume at NYMEX is about on average this morning. Market participants are waiting for the European financial and forex markets to open, for the release in the afternoon of a couple of U.S. indicators and of the Baker Hughes' rig count released after office hours. They will also scrutinize any news on the situation in Canada and Nigeria and the strike in France.

Houston (ex-wharf indications 27-5)
380cst $223
180cst $324
MGO $466

New Orleans (ex-wharf indications 27-5)
380cst $232
180cst $279
MGO $448

Singapore (delivered indications 26-5)

380cst $231
180cst $238
MGO $439

Fujairah (delivered indications 26-5)

380cst $242
180cst $247
MGO $489

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $223
MGO 0.1%S: $423