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Technical indicators: neutral to bearish

Oil futures are seen in consolidation today, possibly correcting slightly upwards in a technical reaction to yesterday's losses which traders consider overdone. Yet the technical constellation is bearish and will limit possible gains. Crude futures edged into negative territory today, as market participants cashed in on oil price gains in the last quarter 2010 and mulled over lower-than-expected draws in U.S. crude stockpiles. There is very low liquidity in the market and a bit of book squaring going on before the end of the year. Oil prices are expected to remain on the back foot heading into the new year, with a combination of seasonality, lower oil demand growth and risk of fund liquidation likely to keep market bulls at bay. When oil prices fell through the lower limit of the technical triangle yesterday, massive technical selling was triggered. Positive US economy data and DOE inventories were not seen bullish enough to drive prices through WTI's 91.40 dollar resistance (the upper limit of the triangle). Both Stochastic and RSI indicator left overbought territory and give bearish signals this morning. The first support for the WTI crude is seen at 89,90 dollars today, the first resistance at 91,25 dollars.

ICE Gasoil January is expected to open 3.00 to 4.00 dollars up at about 769,25 dollars/ton after settling at 765,75 dollars (official settlement price) Thursday night. This was 14,25 dollars below Wednesday's settlement. Volume with some 42.100 deals about on average.

U.S.

Nymex Access losing: Oil prices are flat in Asian trading hours and NYMEX electronic trading this morning, WTI crude lingering below 90.00 dollars for a barrel in thin year-end trading. Most traders have closed their books for this year.

DOE stocks: crude oil +3.058; distillates +1.383; gasoline -3.139; refinery utlization +0.2 = 85.6%. Cushing +1.3 at 36.8 million barrels.

API stocks: crude oil +3.058; distillates +1.383; gasoline -3.139; refinery utlization +0.2 = 85.6%. Cushing +1.3 at 36.8 million barrels.

Survey was: crude oil -2.8; distillates -0.6; gasoline +1.5 million barrels vs previous week. Refinery utilization: -0.1%.

Oil futures collapsed yesterday during the session in New York after what were, at a second glance, rather neutral DOE data. The smaller-than-forecast drop in crude inventories and the surprise rise in distillate stocks (including heating oil and diesel) compensated the unexpected drop in gasoline inventories. Yet the hefty losses came as a surprise, so analysts and must be regarded as a year-end selloff, triggered by the technical constellation. Severe cold conditions in the U.S. Northeast, slammed by one of the worst blizzards on record over the Christmas holiday, have depleted fuel stocks and added support to oil prices. But warmer weather is expected to return this weekend, curbing heating fuel demand and pressuring crude prices.

Initial unemployment claims fell by 34.000 to 388.000 last week after 422.000 the week before. Economists had expected 416.000 new applications for jobless benefits. The positive data have so far no impact neither on oil prices nor on the dollar. The Chicago PMI rose to 68.6 in December after a reading of 62.5 in the previous month. Economists had expected the index at 61.5. Pending home sales rose 3.5% in December after a 10.4% increase in the previous month. Economists had expected an increase of only 2.1%. Oil prices have not yet reacted to the overall positive data, the markets eyeing the release of US petroleum inventories at 17:00.

US natural gas storage volumes according to EIA for the week till December 24th, 2010: -136,00 bcf (billion cubic feet) at 3.232 bcf vs 3.368 bcf the previous week

Houston (ex-wharf indications 30/12)

380 cst $493
180 cst $514
MDO $780

Very tight avails for 180 cst

New Orleans (ex wharf indications 30/12)

380 cst $497
180 cst $518
MDO $790

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

Crude is mid end of year sell-off with WTI -$1.79. Singapore paper is not yet adopting it fully with -$5.05 for 180 cst and -$4.70 for 380 cst for Jan, and for Feb 180 cst -$5.10 and 380cst -$4.30 with MGO Jan contracts at -$1.38 and for Feb at -$1.44 also. The cargo market is yet to react to the drops with 180cst +$2.21, 380cst +$2.53 and MGO +$0.35.

High premiums for prompt deliveries.
380 cst $508
180 cst $518
MDO $781

Rotterdam (delivered indications)

In the MOC 120KT was traded between 485-489 with RWE the main buyer swapping dates and Totsa the main seller.

6 VLCCs due lifting product in Rotterdam is enough to leave the market tight at the end of the year - with another Suezmax also lifting leaving the market firm. In Hamburg and the Baltic ice is hindering re-supplies particularly of MGO. The market as a whole is quiet in NWE with most owners having fixed their requirements ahead of the New Year. Antwerp though the enquiries are still quite active with the market tight on barge avails.

Indications for delivered bunkers:

380cst: $488
(1.5%): $500
180cst: $498
(1.5%): $526 (very low avails)
MGO 0.1%S: $775