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Oil prices edged lower in European trade this morning, with the U.S. benchmark falling further below the $50-level amid indications of increased domestic drilling activity.

Although market fundamentals remained slightly bullish Friday morning against the backdrop of renewed attacks against oil facilities in Nigeria, the technical constellation pointed to a downward correction. We soon assessed the technical constellation as bearish as the Stochastic indicator and the RSI gave off selling signals. We explained that the 50 USD-mark would be a key-support and that the 7-period moving average was near this level. Oil futures at ICE and NYMEX thus posted considerable losses in the first half of the day. Losses were limited by the fact that traders rolled their positions into the Gasoil contracts with later delivery after the June contract had expired as well as by reports on attacks against a Nigerian pipeline operated by ENI. However, WTI had already broken below its key-support at that time, generating more downward potential. Near 49.45 USD WTI and 50.00 USD Brent investors no longer locked in profits. When oil futures dropped below these levels, too, there renewedly was a sharp downward move. Profit taking dominated Friday's session and when Baker Hughes reported another rise in the number of active US oil rigs Friday evening, it added to the pressure on oil futures. Oil futures thus ended the day with considerable losses.

ICE Gasoil contract for July delivery settled at 451.50 USD on Friday, this was 9.00 USD below Thursday's settlement. With some 92,100 deals, the traded volume (front month) was above average.

The Stochastic indicator is still neutral this morning after having given selling signals at ICE and NYMEX charts last week. Moreover, the indicator has dropped below 50%. The RSI has entered neutral territory, losing some of its bearish influence. Its selling signals have largely been priced in. Oil futures at ICE and NYMEX have already broken below Friday's lows and the 21-period moving average. This generated fresh downward potential. WTI has thus breached a medium-term support which had developed in the past two months. From a merely technical point of view, this points to more tests of the downside. Oil futures might approach the lower Bollinger Bands if they settle below the 21-period moving average today. The price target of WTI would be near 47.30 USD. Although the actual selling signals were already triggered last week, that is the technical downward momentum has weakened, the technical constellation can still be assessed as neutral.

U.S.

Nymex above Average: Oil futures have renewedly dropped against the backdrop of a rise in the number of active US oil rigs. They have thus already broken below Friday's lows in East Asia and NYMEX ectronic trading. The traded volume at NYMEX is far above average this morning. Investors are waiting for the European financial and forex markets to open as well as for news regarding Nigeria. Today there are no important economic indicators on the agenda. Moreover, market participants are awaiting the release of the OPEC's monthly energy report.

Houston (ex-wharf indications 13-6)
380cst $240
180cst $341
MGO $482

New Orleans (ex-wharf indications 13-6)
380cst $246
180cst $287
MGO $462

Singapore (delivered indications 13-6)

380cst $241
180cst $246
MGO $441

Fujairah (delivered indications 13-6)

380cst $245
180cst $250
MGO $489

ARA (Amsterdam - Rotterdam - Antwerp)

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