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Technical indicators: bearish immediate term / neutral medium term

Oil prices retreated this morning as the dollar gained against the euro, making the commodity more expensive for buyers holding that currency. Also hitting sentiment was a plunge in Chinese stock markets on concerns Beijing will take more steps to cool economic growth after inflation hit a 25-month high in October.

Yesterday, oil prices tumbled in Asian trading hours and during NYMEX Access trade overnight, WTI crude declining from a two-year high, on speculation China will raise interest rates, curbing growth in the world’s biggest energy consumer. Futures fell for the first time in three days and were set for a weekly drop as Asian equities and U.S. stock-index futures slid on signs China is preparing to increase the cost of borrowing to curb inflation.

The OPEC in its latest report released today revised up its estimate for global oil demand growth in the current year by 190,000 barrels a day, as it expects world economy to expand at a faster pace than previously expected. The cartel also made a slight upward revision to world oil demand growth in 2011, which is now forecast at 1.2 million barrels a day.

ICE gasoil December is is expected to open 10.25 to 11.75 dollars down at about 747.25 dollars/ton after settling at 758.25 dollars (official settlement price) Thursday night. This was +1.25 dollars vs Wednesday's settlement. Volume with some 86,100 deals well above average. The ICE gasoil contract for November delivery expired at 758.00 Dollars (+4.75 dollars vs previous days' settlement).

The uptrend has softened this morning after the medium-term resistance line in the area of 88.60 dollars proved strong yesterday. RSI and Stochastic indicators are both still in overbought territory, providing more potential for a short-term downward correction. Should the RSI fall through the 70% line and WTI crude prices through 86.00 dollar mark, massive technical selling is expected. First WTI crude support seen at 86.00 dollars today, first resistance at 87.80 dollars.

U.S.

Nymex Access : Oil prices tumbled in Asian trading hours and NYMEX electronic trading this morning, WTI crude nearing 86.00 dollars a barrel as investors are getting rid of their long positions to take profit ahead of the weekend. No news in the markets. The traded volume is well above average.

IEA energy report
- global oil demand growth in 2010 revised upward 0.2 mill b/d vs earlier estimate
- global refinery utilization in the third quarter rose 2.2 mill b/d vs year ago
- global refinery utilization seen +1.5 mill b/d in the fourth quarter vs year-ago
The agency cautions that economic recovery will slow down in 2011 due to high oil prices. The warning comes after the price of crude oil rose to 89.70 dollars a barrel Thursday and after some oil producers said high prices wouldn't hurt the economy or should even rise higher.

Houston (ex-wharf indications 11-11)

380cst: $491
180cst: $511
MGO: $782

Very tight avails for 180cst

New Orleans (ex-wharf indications 11-11)

380cst: $493
180cst: $513
MGO: $785

Singapore (correct as of 1430hrs local time)

Crude is recorrecting strongly with WTI -$2.51. Singapore paper is turning as well with 180cst -$11.50 and 380cst -$12.00 for Nov, and Dec 180 cst -$11.95 and 380cst -$11.71 with MGO Nov contracts -$2.06 and for Dec at -$2.09. The cargo market is not yet reacting with 180cst +$7.44, 380cst +$8.45 and MGO +$1.40.

In Singapore fuel oil market December Western arbitrage volume is expected to be higher than November's six-month low levels, with 3.5-3.6 tones booked so far. The Singapore bunker differential, the price spread between ex-wharf marine fuel prices and fuel oil cargo values, was stronger at $2.05, up 68 cents, with bunker fuel prices rising $8.00 at $509.00/mt. Fuel oil cracks rose for a fourth straight session. Today markets are trading down.

High premiums for prompt deliveries:

380cst: $498
180cst: $508
MGO: $745

Fujairah (delivered indications 12/11)

380cst: $507
180cst: $525
MGO: $755

Rotterdam

Yesterday (Only barge trade deals of >2 KT reported) 92KT was traded between 485.50-487.00 with Petroned as the main seller to Litasco as the main buyer.

The NWE HSFO markets still see strong buying interest, with the Eastern Arbitrage bolstering. Despite four VLCC's have been fixed for early December loading, local avails remain adequate. The Capricorn Star and Al Jabriyah II were fixed for November loading. The HSFO Med market is not attracting any influx yet but the arbitrage out of NWE seems likely to open soon. The NWE LSFO markets continue to see imports out of the Americas, keeping them long.

380cst: $484
(1.0%): $497
180cst: $798
(1.0%): $813
DMB: N/A
MGO 0.1%S: $747