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Oil prices fell this morning on expectations of high and rising exports from the Middle East, while concerns about China's economy weighed on the demand outlook.

After the holiday in the USA and the UK oil futures struggled to find direction Tuesday morning. Neither the technical constellation nor market fundamentals provided any fresh cues. The support near the 7-period moving average was regarded as a particularly important marker as it limited the downward potential in the past few weeks. On Tuesday, this line stayed strong at first which is why oil futures remained largely unchanged almost all day. Oil futures only gained some ground in afternoon trade, fostered by raised price forecasts for Brent and WTI as well as by estimates on US crude oil inventories released by data provider Genscape. According to Genscape, crude oil stockpiles in Cushing, Oklahoma, dropped by approximately 0.7 mbpd in the week ending May 27. WTI renewedly tested the psychological mark of 50 USD against the backdrop of this forecast. However, investors took profits shortly after this rise. Since other bullish cues were lacking, the resistance at 50 USD remained strong. The fact that analysts raised their price forecasts didn't come as a surprise as Goldman Sachs had already upwardly revised its outlook for oil prices last week. Besides, the draw in Cushing crude oil inventories isn't surprising either as the wildfires in Canada had dented supplies. When the July Brent contract and the June NYMEX Gasoline and Heating Oil contracts expired at 8.30 p.m., oil futures erased earlier gains. WTI even ended the day below its 7-period moving average.

ICE Gasoil contract for June delivery settled at 453.50 USD on Tuesday, this was 1.25 USD above Monday's settlement. With some 42,300 deals, the traded volume (front month) was far below average.

The Stochastic indicator had given off a selling signal at the Brent and the WTI chart on Monday but on Tuesday its bearish influence weakened. This morning the lines of the indicator are diverging. That is why the indicator can be interpreted as bearish again, the more so as the Stochastic indicator has meanwhile fallen below 50%. The 50 USD mark remains a strong resistance for oil prices. After having bounced off this resistance, oil futures broke below the 7-period moving averages. Oil prices might now approach 48.50 USD. If this support is breached, more potential down to the 21-period moving averages might be generated. The technical constellation can thus be assessed as slightly bearish.

U.S.

Nymex above Average: Oil futures edged lower in East Asia and in NYMEX electronic trading this morning, weighed down by bearish factors like the rise in OPEC output and the disappointing economic data out of China. The traded volume at NYMEX is above average this morning. Investors are waiting for the European financial and forex markets to open and for the release of a string of economic indicators. They are also eying news on output losses in Canada and Nigeria and the release of the API's report on US oil inventories (after our office hours).

Houston (ex-wharf indications 1-6)
380cst $228
180cst $327
MGO $458

New Orleans (ex-wharf indications 1-6)
380cst $233
180cst $279
MGO $447

Singapore (delivered indications 1-6)

380cst $226
180cst $231
MGO $434

Fujairah (delivered indications 31-5)

380cst $237
180cst $242
MGO $494

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $223
MGO 0.1%S: $442