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Technical indicators: neutral to bearish

Oil prices are seen easing further in the morning on technical selling. The seven-day moving average at 87.55 dollars is seen as a key level today. Should the mark be breached, more technical buying orders will be triggered.

Even though NYMEX crude futures breached 90.00 dollar resistance yesterday, the next mark at 90.80 dollars proved solid and the expected technical sell-off was triggered. Technical analysts spoke of a mainly technical market reaction, supported by the recovering dollar. The greenback was helped back up by a jump in U.S. bond yields on the prospect of extended U.S. tax cuts that reduced appetite for commodities, prompting investors to turn to the dollar as a safe-haven currency.

The EIA left it's forecast for world oil demand in 2011 unchanged, as it lifted its outlook for oil supplies from non-OPEC countries this year. The World consumption is expected to rise to 1.43 million bpd next year, down 10,000 bpd from the projected increase of 1.44 million bpd last month. World oil demand is expected to reach 87.78 million bpd next year, up 1.66 % compared to 2010. Most of this demand will be counted for by the developing areas such as China, Middle East and Brazil.

ICE Gasoil December is expected to open 8.00 to 9.50 dollars down at about 757.50 dollars/ton after settling at 766.25 dollars (official settlement price) Tuesday night. This was 0.25 dollars above Monday's settlement. Volume with some 28,300 deals below average.

The important 90.00 dollar resistance for the WTI crude was breached Tuesday, but the upward potential was not strong enough and the overbought market situation, as well as the double-top formation, triggered, not unexpectedly, a technical sell-off. Both RSI and Stochastic indicator are giving selling signals, but the uptrend is still intact. The first support for the WTI crude is seen at 87.55 dollars today (seven-day moving average), the first resistance at 89.85 dollars.

U.S.

Nymex Access: Oil prices are easing in Asian trading hours and NYMEX electronic trading this morning, extending Tuesday's losses on a stronger dollar and technical selling. No news in the markets. The traded volume is well above average.

APIs: crude oil -7.338; distillates

+1.744, gasoline +1.069 million barrels vs previous week. Refinery utilization -1.7%

DOEs: due out tonight.

Forecasts: crude oil -1.3; distillates -0.7; gasoline +0.4 million barrels vs previous week. Refinery utilization: +0.9%

Houston (ex-wharf indications 7/12)

380 cst $488
180 cst $510
MDO $774

Very tight avails for 180 cst

New Orleans (ex wharf indications 7/12)

380 cst $491
180 cst $514
MDO $778

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

Crude is dropping like a stone with WTI -$1.44 Singapore paper is more cautious, losing with -$5.16 for 180 cst and -$4.99 for 380 cst for Dec, and for Jan 180 cst -$4.24 and 380cst -$4.69 with MGO Dec contracts at -$0.45 and for Jan at -$0.43 The cargo market is not yet reacting with 180cst -$5.69, 380cst -$5.70 and MGO -$0.50.

The Singapore fuel oil market came off more than $5.0/mt during the Platts window tracking sluggish crude movement. The fuel oil crack weakened yesterday. Market was supported by buying interest maintained by Brightoil. The market seems adequately supported and the delivered bunker premium ranged $1.5 - 2.0/mt above cargo prices yesterday. Bunker fuel swaps lost again along the curve both for Rotterdam 3.5% Barges FOB and Singapore 180cst Cargo FOB. Losses were more pronounced at the fron of the forward curve while backend was stronger adding a couple of dollars to the contango. Both markets are trading lower today.

High premiums for prompt deliveries.

380 cst $498
180 cst $508
MDO $771

Fujairah (delivered indications 8/12)

380cst: $502
180cst: $536
MGO: $786

Rotterdam (delivered indications)

Yesterday (Only barge trade deals of >2 KT reported) In the MOC 50KT was traded between 473.25-476.75 with Petroned as the main seller to Gunvor and Koch as the main buyers.

The NWE HSFO markets are well supplied, with the Russian influx underpinning the markets, outweighing the seven VLCC's reportedly fixed. 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 also still well supplied, with stored product entering the market and product arriving out of the US. The continuing cold weather however is lending some support.

Indications for delivered bunkers:

380cst: $ 478
(1.5%): $ 492
180cst: $ 493
(1.5%): $ 508 (very low avails)
DMB: $ N/A
MGO 0.1%S: $ 765