---

Technical indicators: neutral

Oil futures drop at midday after having consolidated in the morning, ICE brent and WTI crude are ranging short below first support lines in thin pre-holiday trading. Whether the breach is persistant depends to a large extent on the development of the dollar.

Oil prices ended slightly higher in London and lower in New York last night after a volatile session, as mixed US economy data failed to give direction.

ICE gasoil Januari is expected to open 0.50 to 1.50 dollars down at about 768.25 dollars/ton after settling at 769.25 dollars (official settlement price) Thursday night. This was 1.00 dollars above Wednesday's settlement. Volume with some 51.600 deals on average.

Nothing much has changed from the technical point of view. The lateral trendchannel is still intact. The RSI indicator is in neutral territory this morning, while the Stochastic is still seen slightly bullish. In thin pre-holiday trading technical aspects will be the leading indicators, so below and above support and resistance lines, stop loss orders will be triggered. However, analysts see oil prices staying within the trading range for the time being. The first support for the WTI crude is seen at 87.60 dollars, the first resistance at 88.65 dollars.

U.S.

Nymex Access: Oil prices are regaining some ground in Asian trading hours and NYMEX electronic trading this morning, WTI crude climbing back above 88.00 dollars, after an unexpected decline in U.S. claims for jobless benefits and gains in housing starts bolstered the outlook for the economy and the dollar lost more ground vs other major currencies. No news in the markets. The traded volume is below average.

Houston (ex-wharf indications 16/12)

380 cst $491
180 cst $508
MDO $774

Very tight avails for 180 cst

New Orleans (ex wharf indications 16/12)

380 cst $494
180 cst $511
MDO $777

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

Crude is slowing, but losing still with WTI -$0.13. Singapore paper is turning bullish with Dec +$2.05 for 180 cst and +$2.00 for 380 cst, and for Jan 180 cst +$2.25 and 380cst +$1.95 with MGO Dec contracts at +$0.17 and for Jan at +$0.09. The cargo market is starting to adopt the bullisness with 180cst +$8.09, 380cst +$7.69 and MGO +$0.70.

The Asian fuel oil strengthened on Thursday as its January/February time spread inched up in backwardation for a 3rd straight session while its cracks rebounded above a discount of $ 10.00 bbl for the first time in over a week. The rebound came despite crude benchmarks hitting a 26-month high during London hours. China's Brightoil, which has been on its own fuel oil market slipped more than 1.5 usd on softer crude movements during the Platts window Yesterday. There is not much change to fundamentals and Brightoil is still buying both the physical and also the fuel oil swaps lending some support to the market. The delivered bunker premiums were 0.50 to 1.50 usd above cargo prices Yesterday.

High premiums for prompt deliveries.

380 cst $508
180 cst $518
MGO $775

Fujairah (delivered indications 16/12)

380cst: $508
180cst: $540
MGO: $797

Rotterdam (delivered indications)

Yesterday (Only barge trade deals of >2 KT reported) In the MOC 92KT was traded between 485.00-488.00 with Petroned and RWE as the main sellers to Gunvor and Totsa as the main buyers.

The NWE HSFO markets are well supplied, the Eastern Arbitrage considered to be at well workable levels now. Six VLCC's plus three Alfamax fixtures are reported for December loading. 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: $491
(1.5%): $507
180cst: $504
(1.5%): $518 (very low avails)
DMB: N/A
MGO 0.1%S: $775