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Technical indicators: bullish

Crude oil futures soared to a 26-month high this morning, as the U.S. dollar weakened against its major rivals and as colder-than-normal temperatures increased demand for heating fuel. The U.S. dollar came under broad selling pressure amid renewed speculation that the Fed would expand monetary easing to support the U.S. economic recovery.

Yesterday oil prices presented themselves very inconsistent in after-hours trading, having settled slightly higher after a very volatile session in New York that was influenced on one hand by the cold front in the Northern Hemisphere (bullish) and on the other hand by the prospect of an interest rate hike in China as soon as this weekend (bearish).

ICE Gasoil December is expected to open 1.50 to 2.50 dollars down at about 764.00 dollars/ton after settling at 766.00 dollars (official settlement price) Monday night. This was 4.25 dollars above Thursday's settlement. Volume with some 38,900 deals on average.

Oil prices are still in a solid uptrend. First resistance lines were breached Monday. Both RSI and Stochastic indicator are still in overbought territory, a signal for a downward correction. Also, the crude oil chart still shows a double-top formation, so a sudden and hefty price collapse could be triggered today. Should prices keep on rising however, the double top will not materialize. The first support for the WTI crude is seen at 88.80 dollars today, the first resistance at 89.75 dollars. Analysts expect another test of the 90.00 dollar WTI crude resistance.

U.S.

Nymex Access: Oil prices are little changed in Asian trading hours and NYMEX electronic trading this morning, with a bearish undertone after China's announcement to hike interest rates as soon as this weekend. No news in the markets. The traded volume is on average.

Houston (ex-wharf indications 6/12)

380 cst $494
180 cst $516
MDO $779

Very tight avails for 180 cst

New Orleans (ex wharf indications 6/12)

380 cst $497
180 cst $519
MDO $782

Singapore (correct as of 1430hrs LT - delivered indications)

Crude is turning with WTI -$0.17 Singapore paper is mirroring crude with -$5.55 for 180 cst and -$4.95 for 380 cst for Dec, and for Jan 180 cst -$3.95 and 380cst -$4.90 with MGO Dec contracts at -$0.65 and for Jan at -$0.69 The cargo market is not yet reacting with 180cst +$3.43, 380cst +$2.27 and MGO +$2.53.

The Singapore fuel oil market was supported by strong buying interest especially by Brightoil, which continued to buy for the 4th straight trading sessions, adding length both in the paper and physical products. The market is supported by short term tightness as December incoming cargoes remain lower than average. It is estimated to count around 3.3 million mt. Current fuel oil supplies are also sporadically troubled by high water content making it off specification for bunker use contributing to occasional tightness. Bunker fuel swaps lost a couple of dollars along the curve both for Rotterdam 3.5% Barges FOB and Singapore 180cst Cargo FOB during a rather quiet trading session yesterday. Both markets are trading lower today.

High premiums for prompt deliveries.

380 cst $503
180 cst $513
MDO $775

Fujairah (delivered indications 7/12)
380cst: $506
180cst: $536
MGO: $785

Rotterdam (delivered indications)

Yesterday (Only barge trade deals of >2 KT reported) In the MOC 22KT was traded between 477.00-479.50 with BP, Petroned and Chemoil as the main sellers to Koch as the main buyer.

The NWE HSFO markets continue to firm, with both Russian influx and the open Asian arbitrage to tip the balance. Six VLCC's were reported fixed at the end of last week, with at least two fresh fixtures this week. The HSFO Med markets are oversupplied and sluggish, with cargoes to NWE starting to become more attractive. For the LSFO there are some cargoes seen moved from NWE to the Med, although the arbitrage is not considered to be open yet. The NWE LSFO markets are well supplied, with stored product entering the market and product arriving out of the US.

Indications for delivered bunkers:

380cst: $ 480
(1.5%): $ 495
180cst: $ 502
(1.5%): $ 517 (very low avails)
DMB: $ N/A
MGO 0.1%S: $ 776