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Technical indicators: bullish

The bullish DOE data which did not match the API's report released on Tuesday, pushed oil prices up right after their release in line with rising equity markets and a weak dollar. U.S. crude stocks fell more than expected while oil product inventories slid against expectations of a rise in supplies as refiners cut operating rates to the lowest level since April.

Oil prices breached various resistance lines during Wednesday's rally after DOE data supplied the bullish momentum and NYMEX crude support at 75.50 dollars proved strong. A short-term uptrend has formed. The RSI indicator gives rather bullish signals this morning while the Stochastic remains in overbought territory, paving the way for a downward correction. First WTI crude support line at 76.00 dollars today, first resistance line at 78.15 dollars. Oil futures move in a narrow range on their high level that resulted from DOE data showing draws in crude and fuel stockpiles. But signs are that Wednesday's rallye is considered as overdone and the risk for a correction lower as predominant, the more as analysts do not expect today's economy data to be more than neutral.

NYMEX crude is set to close September with the strongest gain in seven months after US stockpiles declined while a weak dollar lifted most commodities. Today much will depend on US economy data to be released later today.

ICE Gasoil October is expected to open +10,00 to +11,50 dollars at about 698,50 dollars/ton after settling at 687,75 dollars (official settlement price) Wednesday night. This was 5,75 dollars above Tuesday's settlement. Volume with some 42.600 deals on average.

U.S.

Nymex Access : Oil futures are flat in Asian trading hours and NYMEX electronic trading this morning, WTI crude oil trading near a seven-week high despite the rising dollar and weak Asian equity markets. No news in the markets. The traded volume is above average. NYMEX heating oil and gasoline contracts for for October delivery expire today. Therefore November contracts will be more actively traded today

Survey of US petroleum inventories :

APIs: crude oil -2.415; distillates -2.814; gasoline +3.018 million barrels vs previous week. Refinery utilization +1.4 % = 83.6%

DOEs: crude oil -0.475; distillates -1.265; gasoline -3.469 million barrels vs previous week. Refinery utilization

-2 % = 85.8%

Forecasts : crude oil -0.1; distillates +0.4; gasoline +1.1 million barrels vs previous week. Refinery utilization:

-0.4%

Houston (ex-wharf indications 29-9)

380cst: $442
180cst: $462
MGO: $732
Very tight avails for 180cst

New Orleans (ex-wharf indications 29-9)

380cst: $444
180cst: $464
MGO: $735

Singapore (correct as of 1430hrs local time)

Crude is surging with WTI +$2.29. Singapore paper is not as bullish as one would have thought with 180cst +$6.25 and 380cst +$5.45 for Oct, and Nov 180 cst +$6.20 and 380cst +$5.60 with MGO Oct contracts +$1.97 and for Nov at +$1.99. The cargo market is starting to react to the upward moves with 180cst +$4.90, 380cst +$4.55 and MGO +$1.01.

The Singapore fuel oil price rebounded by more than $4.0/mt gaining back previous day loss during the Platts window yesterday. There are no big changes fundamentally, market looks soft and supplies are ample. The delivered premiums were more than $0.5/mt above cargo prices. Bunker fuel swaps gained $0.75 - 1/mt both in Rotterdam and in Singapore lifting the forward curve a little higher without changing it significantly. This morning both markets are trading up pricing in a recent advance of crude futures.

High premiums for prompt deliveries:

380cst: $460
180cst: $451
MGO: $685

Fujairah (delivered indications 30/9)

380cst: $452
180cst: $473
MGO: $727

Rotterdam

Yesterday (Only barge trade deals of >2 KT reported) 24KT was traded in the MOC between 430.00-431.00 with Litasco as the main seller and Gunvor as the main buyer.

The low sulphur fuel oil market in Northwest Europe, a structurally short market, was finding itself the destination of healthy volumes of arbitrage barrels on a lack of potential alternative outlets lets. Sources said Shell was importing a Colombian LSFO cargo and a Congolese cargo into NWE, both scheduled to arrive October 10-12. The Colombian cargo has a relatively higher sulfur content of about 1.6%, high viscosity, and high density, while the Congolese parcel is higher quality product, and sources said the oil could be blended to bunker specification in the Amsterdam-Rotterdam-Antwerp region. Shell declined to comment on the imports.

All barrels are pointing to Europe right now especially if the blending is locked in. Arbitrage barrels, notably ex-US parcels, were keeping the NWE LSFO market well-supplied of late. Platts assessed the hi-lo at $11/mt, $1.75/mt narrower on the day. The high sulfur FO market exhibited some structural weakness Wednesday on soft demand, as no new arbitrage fixtures were forthcoming. However, sources said they expected the contango to remain rangebound and not show any drastic swings even as the Singapore 180 CST market continued to weaken. Galaxy, which was offering in the Platts Market on Close assessment process for the better part of this month, was not offering Wednesday, which instead saw two bids for ISO:2010 bunker specification product.

380cst: $442
(1.0%): $463
180cst: $467
(1.0%): $489
DMB: N/A
MGO 0.1%S: $706