---

Technical indicators: bearish

Oil prices ease in electronic trading, brent and WTI crude falling through first support lines. Yet prices are expected to regain their strength after should the DOE inventory report show the expected draw in US crude stocks. Encouraging U.S. economic releases would also lend support.

After a very volatile session, oil prices settled higher in London and New York yesterday, lifted by the slump in the dollar and a strong performance of US equity markets. The early restart of the Candian-U.S. pipeline eventually weighed on prices in late NYMEX session. Enbridge said Tuesday, it was near to completing repairs on the duct and might be able to restart the line by the end of the week, causing the prompt WTI price to weaken much more than Brent.

ICE gasoil October is expected to open 3.25 to 4.75 dollars lower at about 673.25 dollars/ton after settling at 677.25 dollars (official settlement price) Tuesday night. This was 3.00 dollars above Monday's settlement. Volume with some 66,300 deals above average.

The uptrend is still intact. WTI crude resistance at 78.00 dollars proved strong yesterday, preventing further gains. Both RSI and Stochastic are giving selling signals this morning. But only below 74.00 dollar support for the crude contract will the uptrend be breached. First WTI crude resistance line seen at 78.00 dollars today, first support line at 76.00 dollars.

U.S.

Nymex Access trade: Oil prices are trading lower in Asian trading hours and NYMEX electronic trading this morning, as Enbridge prepared to restart the biggest Canada-U.S. crude pipeline, raising expectations of a short-lived shutdown that would limit the drainage of record-high inventories. No news in the markets. The traded volume is above average.

APIs: crude oil +3.333; distillates -1.524, gasoline -0.963 million barrels vs previous week. Refinery utilization -0.6%.

DOEs: due out tonight.

Forecasts: Crude oil -2.6; distillates +0.3; gasoline -1.1 million barrels vs previous week. Refinery utilization: -0.6%

Houston (ex-wharf indications 14-9)

380cst: $438
180cst: $457
MGO: $719

Very tight avails for 180cst

New Orleans (ex-wharf indications 14-9)

380cst: $441
180cst: $460
MGO: $722

Singapore (correct as of 1430hrs local time)

Crude is cooling still with -$0.98 Singapore paper slowing, but not yet turning with 180 cst +$0.75 and 380cst +$0.45 for Sep, and Oct 180 cst +$2.30 and 380cst +$2.35 with MGO Sep contracts at -$0.06 and for Oct at -$0.05. The cargo market is ignoring the bearish sentiment and bounces back up with 180cst +$2.53, 380cst +$1.77 and MGO +$0.66.

The Singapore fuel oil price rebounded by app. $1.5 - 2.5/mt during the Platts window yesterday. However, the prices declined a little later as crude prices softened. The bunker demand was pretty weak. The delivered bunker premiums came under pressure, was app by app. $1.50/mt above the cargo prices. Bunker fuel swaps gained app. $2.75-3.25/mt dollars both in Rotterdam and Singapore. Front month was stronger in general against the 2011 papers gaining app. 50 cents more. October Rotterdam papers were even stronger compared to Singapore. This morning both markets are trading down.

High premiums for prompt deliveries:

380cst: $442
180cst: $449
MGO: $665

Fujairah (delivered indications 15/9)

380cst: $445
MGO: $725

Rotterdam

Yesterday (Only barge trade deals of >2 KT reported) 102KT was traded in the MOC between 433.00-435.50 with Litasco and Gunvor as the main sellers to BP and RWE as the main buyers.

NWE HSFO markets are firming on the back of reported fixtures, opening the Eastern arbitrage. The Med has seen some influx out of NWE, but the margins are very tight. The LSFO markets are balanced, with some Med demand surfacing, but tight on on-spec EU qualified product.

380cst: $436
(1.0%): $464
180cst: $454
(1.0%): $486
DMB: N/A
MGO 0.1%S: $672