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Technical indicators: neutral to bearish

Oil prices declining, with Brent and WTI crude both below key short and medium-term moving averages on technical charts. WTI crude breached 81.91 dollars, the mid-point between September 23 and November 11 closing prices.

Oil futures collapsed yesterday, WTI crude capping the biggest three-day loss since August as speculation that fuel demand will drop on China’s steps to cool its economy outweighed signs that U.S. consumption is rising. Prices also fell on concern Europe’s debt crisis is worsening as finance ministers consider a rescue package for Irish banks. The higher-than-expected draw in US crude stocks as per API had no` immediate influence on prices.

OPEC: The UAE and the other OPEC members have made massive investments to ensure the world has sufficient spare oil capacity in case of a crisis. Mr Ali Obaid Al Yabhouni, the UAE’s Opec Governor said at the unveiling of the country’s plan to commemorate the oil exporting group’s 50th anniversary at a forum on December 5th that OPEC’s ability to respond to unforeseen events and whenever necessary to increase production depends on massive investments in spare capacity. Oilfields and oil facilities are kept unused in case of an emergency.

ICE gasoil December is is expected to open 4.50 to 5.50 dollars down at about 719.00 dollars/ton after settling at 724.00 dollars (official settlement price) Tuesday night. This was -14.75 dollars vs Monday's settlement. Volume with some 88,900 deals above average.

After various support lines were breached Tuesday, the downtrend has become steeper and both RSI and Stochastic indicator are now in oversold territory. When WTI crude eventually fell through 83.00 dollar support, massive technical selling was triggered. Apart from China and Ireland worries there was no fundamental reason to trigger the collapse, so analysts regard it as a mainly technically driven reaction. First WTI crude support at 82.00 dollars already breached, first resistance seen at 83.00 dollars today.

U.S.

Nymex Access : Oil prices are flat in Asian trading hours and NYMEX electronic trading this morning, WTI crude holding just above a two-week low of 82.00 dollars for a barrel, traders waiting for direction after Tuesday's hefty losses. No news in the markets. The traded volume is above average.

APIs: crude oil -7.652; distillates +0.222, gasoline -1.653 million barrels vs previous week. Refinery utilization -2.8%

DOEs: due out tonight.

Forecasts: crude oil -0.3; distillates -2.1; gasoline -0.4 million barrels vs previous week.

Houston (ex-wharf indications 16-11)

380cst: $471
180cst: $490
MGO: $757

Very tight avails for 180cst

New Orleans (ex-wharf indications 16-11)

380cst: $473
180cst: $493
MGO: $760

Singapore (closed today due to public holiday)

The Singapore fuel oil markets closed yesterday also down by app. $5.50/mt. Singapore 380cst bunker grade was assessed $6/mt down from previous close. Market is expected to be thin today due to public holiday in Singapore.

Fujairah (delivered indications 17/11)

380cst: $490
180cst: $515
MGO: $740

Rotterdam

Yesterday (Only barge trade deals of >2 KT reported) 26KT was traded between 458.00-459.00 with Gunvor and Petroned as the main sellers to a mixed bag of buyers.

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 are well supplied, with stored product entering the market in December.

380cst: $459
(1.0%): $470
180cst: $474
(1.0%): $487
DMB: N/A
MGO 0.1%S: $721