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Technical indicators: Neutral to bullish

Crude oil futures were mixed this morning, with the Brent contract rising while the NYMEX crude contract edged lower. Helping the Brent push higher was news that Russia's two biggest oil producers had halted supplies of crude oil to refineries in Belarus. NYMEX crude contract has edged lower, with European investors consolidating gains after the contract settled Wednesday at its highest settlement in more than two years. This has resulted in Brent's premium to the NYMEX contract widening to around 6.85 dollars.

Yesterday, oil futures shed some of their gains in late NYMEX session and after-hour trading, led by a drop in gasoline prices following the release of surprisingly high builds in US gasoline stocks. Besides, Wednesday's rally is regarded as somewhat exaggerated, the bulls having been looking for a good reason to drive oil prices.

ICE Gasoil January is expected to open 1.00 to 2.00 dollars down at about 810.00 dollars/ton after settling at 811.50 dollars (official settlement price) Wednesday night. This was 11.00 dollars above Tuesday's settlement. Volume with some 110,900 deals by far above average. The ICE gasoil contract for January delivery expired at 796.25 Dollars (+1.75 dollars vs previous days' settlement).

The surging oil prices with Brent breaching 98 usd mark may threaten the delicate world economic recovery, and pile pressure on OPEC to up its output.

The short-term downtrend was eliminated yesterday when WTI crude breached the important 90.00 dollar resistance line. Oil prices are currently approaching the top of a medium-term ascending channel with a resistance at 94.65 dollars. As analysts expect the wide spread between the WTI and the Brent to narrow, market momentum remains rather bullish. The Stochastic indicator is on its way up and the RSI shows that there is room for a price advance. Prices may rise as long as the reading is below 70, a level that signals a possible change in direction. The first support for the WTI crude is seen at 90.00 dollars today, the first resistance at 92.00 dollars.

U.S.

NYMEX flat: Oil prices are flat in Asian trading hours and electronic Globex trade this morning, taking their breath after Wednesday's rally. The WTI crude is lingering short below 92.00 dollars for a barrel. The traded volume is on average.

APIs: crude oil +0.057; distillates +1.554 ; gasoline +7.036 million barrels vs previous week. Refinery utilization -0.1%

DOEs: : crude oil -2.154; distillates +2.652 ; gasoline +5.081 million barrels vs previous week. Refinery utilization -1.6%

Forecasts: crude oil +0.2 ; distillates +0.2 ; gasoline +1.5 million barrels vs previous week.

Houston (ex-wharf indications 12/1)

380 cst $512
180 cst $533
MDO $764

Very tight avails for 180 cst

New Orleans (ex wharf indications 12/1)

380 cst $515
180 cst $536
MDO $768

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

Crude is cooling with WTI +$0.19. Singapore paper is slowing as well with Jan +$2.75 for 180 cst and +$2.95 for 380 cst, and for Feb 180 cst +$2.30 and 380cst +$2.40 with MGO Jan contracts at +$0.18 and for Feb at +$0.10. The cargo market is in line with crude and paper with 180cst +$5.47, 380cst +$5.01 and MGO +$2.40.

The Singapore fuel oil markets managed to move up by more than $5.0/mt during the Platts window yesterday. The current strong crude weakened the Asian crack spreads as fuel oil lags behind. The delivered bunker premiums came off slightly ranging $7.5 to $9.0 above cargo prices. Fuel oil swaps gained $4-5/mt along the curve both for Rotterdam barges and Singapore 180cst cargo FOB papers. Visc spread in Singapore has broadened about $10/mt making 380cst paper prices relatively attractive. Both markets are trading higher today.

High premiums for prompt deliveries.

380 cst $538
180 cst $548
MDO $823

Fujairah (delivered indications 13/1)

380cst: $536
180cst: $577
MGO: $876

Rotterdam (delivered indications)

Yesterday, (only barge trade deals of >2 KT reported in the MOC): only 20KT was traded between 506.00-507.50 with Chemoil as the main seller to RWE and Koch as the main buyers.

The Asian arbitrage and buying interest in the ARA have kept the market bullish with loading delays on barges which were scheduled to load as far back as the 3-7th Jan. Price levels are backing off, easing the loading delays somewhat. Two VLCCS are currently loading on arb although the window has now closed for fresh fixtures with the premiums in the ARA as high as $4 despite the softening in VLCC rates. The LSFO is still sluggish, could prompt suppliers to opt for LSFO to meet the prompt HSFO demand. More US cargoes expected next month.

Indications for delivered bunkers:

380cst: $513
(1.0%): $526
180cst: $529
(1.0%): $539 (very low avails)
MGO 0.1%S: $815