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Oil prices fell this morning, as a stronger dollar pulled crude off the 2016 highs hit this week, although strong refinery demand and global supply disruptions lent some support.

Market fundamentals were slightly bullish Thursday morning. The fact that oil producers worldwide have less spare capacities and the production losses in Nigeria generated a rather bullish sentiment, which sent WTI above 50 USD this week. From a technical perspective, however, oil futures lacked momentum on Thursday. Oil futures kicked off the day above the Bollinger Bands and the Stochastic indicator as well as the RSI pointed to a clearly overbought market. Oil futures were thus more susceptible to downward corrections. Although there were no selling signals Thursday morning, in the course of the day, these signals were generated when profit taking set in. The advancing dollar made oil, which is priced in the US-currency, more expensive for investors outside the USA, prompting investors to take profits from their long-positions. Eventually, oil futures sharply declined although output losses and the expectations of a rise in demand over the summer months are still buoying investor sentiment. WTI has failed to drop below 50 USD on Thursday but overall, oil prices posted considerable losses.

ICE Gasoil contract for June delivery settled at 459.50 USD on Thursday, this was 5.00 USD below Wednesday's settlement. With some 40,700 deals, the traded volume (front month) was below average.

Thursday afternoon the RSI gave off a selling signal by dropping below 70%. Since oil markets were overbought, this selling signal pushed prices back below the upper Bollinger Bands. This morning, the Stochastic indicator has turned bearish as well as its lines have crossed. Both indicators thus favour further tests of the downside. WTI might approach 50 USD, which - like the 7-period moving average - is a key support for the US crude oil contract. If WTI breaks below this mark, further downward moves might push the contract down to the 21-period moving average. This support has remained strong since the beginning of June. The latest downward move is a correction within an uptrend which is still intact. It was triggered by profit taking following an exaggerated price rally which had sent oil prices above the Bollinger Bands. Against the backdrop of the selling signals, we assess the technical constellation as bearish.

U.S.

Nymex above Average: Oil futures have meanwhile dropped below Thursday's lows in NYMEX electronic trading. Even so, WTI has not succeeded in sustainably breaking below its key-support at 50 USD. 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 release of today's economic indicators (see economic calendar). Moreover, they are closely eying the development of the situation in Nigeria and the Baker Hughes rig count, which will be released after our office hours this evening.

Houston (ex-wharf indications 10-6)
380cst $238
180cst $344
MGO $483

New Orleans (ex-wharf indications 10-6)
380cst $232
180cst $274
MGO $453

Singapore (delivered indications 7-6)

380cst $236
180cst $242
MGO $439

Fujairah (delivered indications 7-6)

380cst $244
180cst $249
MGO $503

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $233
MGO 0.1%S: $442