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Technical indicators: neutral to bullish

Oil futures reported their biggest drop since February 4th as the dollar rose after the unexpected rate hike by the Chinese central bank. API data, released during after-hours trading, had no influence on prices. A new downtrend channel has started to form after WTI crude breached the important 80.00 dollar support, giving markets a bearish technical signal. The RSI ist still giving neutral signals this morning, while the Stochastic indicator that gave a selling signal last night, is in bearish territory. First WTI crude support line seen at 79.25 dollars today, first resistance line at 83.00 dollars. Oil prices are seen rebounding in the morning as yesterday's losses are somewhat overdone and a technical upward correction is expected. But market sentiment is rather bearish and due to the lack of important economy data today, US petroleum inventories released by the Department of Energy later today will be closely watched.

ICE Gasoil October is expected to open 4,00 to 5,00 dollars lower at about 699,25 dollars/ton after settling at 704,00 dollars (official settlement price) Tuesday night. This was 11,25 dollars below Monday's settlement. Volume with some 75,800 deals well above average.

USA:
Housing starts increased 0.3% to a seasonally adjusted annual rate of 610,000 while economists expected overall housing starts to fall by 4.2% to 573,000.

Building permits fell 5.6% to a seasonally adjusted annual rate of 539,000. Economists had forecast a 1.2% rise in permits.

China raised yesterday its benchmark lending and deposit rates after inflation accelerated to the fastest pace in 22 months. The one-year deposit rate will climb to 2.5 percent from 2.25 percent.

Nymex Access : Oil futures are rising in Asian trading hours and NYMEX electronic trading this morning, recouping part of the biggest loss in eight month on short covering and a weaker dollar. No news in the markets. The traded volume is far above average.

APIs: crude oil +2.315; distillates -0.854 ;gasoline -0.083 million barrels vs previous week. Refinery utilization +0.8 = 80.9%

Survey of US Petroleum inventories : API data will be released Tuesday at 22:30, DOE data Wednesday at 16:30.

Crude oil +2.4; distillates -0.9; gasoline -1.3 million barrels vs previous week. Refinery utilization: unchanged;

Houston (ex-wharf indications 19-10)

380cst: $460
180cst: $478
MGO: $737

Very tight avails for 180cst

New Orleans (ex-wharf indications 19-10)

380cst: $462
180cst: $480
MGO: $741

Singapore (correct as of 1430hrs local time)

Crude is dropping sharply with WTI -$2.30. Singapore paper is not reflecting it as fully as one would expect with 180cst -$6.55 and 380cst -$6.41 for Nov, and Dec 180 cst -$16.60 and 380cst -$6.61 with MGO Nov contracts -$1.82 and for Dec at -$1.82. The cargo market is still on the bull run and yet to react to crude / paper with 180cst +$11.03, 380cst +$10.80 and MGO +$1.78.

The Singapore fuel oil market opened the week, dropping more than -$9.5/mt tracking the crude loss previously during the Platts window. The delivered bunker premiums went up more than $2.0 above cargo prices yesterday as lower outright prices attract bunker demand.

High premiums for prompt deliveries:

380cst: $471
180cst: $463
MGO: $707

Fujairah (delivered indications 19/10)

380cst: $477
180cst: $484
MGO: $735

Rotterdam

Yesterday (Only barge trade deals of >2 KT reported) 24KT was traded in the MOC between 446-447 with Koch as the main seller to mixed buyers.

The Mediterranean high sulfur fuel oil cargo market slipped further under the Northwest European HSFO barge market Tuesday, to $2.25/mt, on easing tightness of the Med market. Platts assessed NWE FOB barges down $7.25/mt to $446.25/mt and Med FOB cargoes down $7.75/mt to $444.00/mt, widening the differential between the two markets by 50 cents. Supply was slated to increase in the Med, despite ongoing French strikes at petroleum terminals, which were now entering their fourth week. In fact, while the strike resulted in a tighter market for other products such as diesel, it helped balance the Med HSFO market, sources said. Galaxy offered two 30kt parcels of bunker grade fuel during the Platts Market On Close assessment process, but neither neither offer found buyers.

In the low sulphur fuel oil market, the hilo differential saw some support and was seen at $11/mt, up from last week when it was seen as low as $3/mt, as traders held back from selling the oil in a front-heavy market, electing instead to hold it in storage. The market also some buying interest for storage rather than end-use. The MOC process saw a 0.986 density, 450 CST viscosity, 15ppm metals content LSFO cargo offered by BP being booked by Total, while a bid by Mercuria for a 0.998 density and 100ppm metals content LSFO cargo remained live until the close of the MOC process. The barge-cargo differential continued to be supported by buying interest for finished bunker specification product and was assessed at parity to the hi-lo differential after a trader reported 1% fuel oil barges basis Antwerp trading at a $8/mt premium to 1% NWE cargoes during the day.

380cst: $451
(1.0%): $474
180cst: $466
(1.0%): $492
DMB: N/A
MGO 0.1%S: $708