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Technical indicators: neutral to bullish

Oil prices are trading higher at midday, boosted by the ailing dollar. ICE gasoil breached first resistance. The crude oil in New York posted only modest gains as high crude stocks weigh.

Yesterday , Oil prices collapsed already prior to the release of US petroleum inventories and continued their decline after U.S. inventories rose across all categories and as China’s inflation fanned speculation the world’s biggest energy consumer will take steps to cool its economy. The stronger dollar that received support from better-than-expected US jobless claims also weighed on prices.

ICE Gasoil February settled at 806.25 dollars (official settlement price) Thursday night. This was 15.00 dollars below Wednesday's settlement. Volume with some 66.000 deals above average.

Oil prices fell through several support lines Thursday, the WTI crude even breached important psychological 90.00 dollar support, giving markets more bearish momentum. The Stochastic indicator is still giving a bearish signal this morning while the RSI is again regarded as neutral . Yet the overall constellation is seen rather neutral today. All contracts are well within their trading range. The first support of the WTI crude is seen at 88.90 dollars today, the first resistance at 90.65 dollars.

U.S.

NYMEX gaining: Oil prices are edging a bit higher in Asian trading hours and electronic Globex trade this morning in a technical reaction to Thursday's hefty losses. The WTI crude lingers short below 90.00 dollars for a barrel, its lowest in ten days and on track for a weekly drop of more than two percent, the third weekly delince in a month. The traded volume is slightly above average.

APIs: crude oil + 3.533; distillates +0.940 ; gasoline +1.869 million barrels vs previous week. Refinery utilization -1.4%

DOEs: : crude oil + 2.617; distillates +1.038 ; gasoline +4.443 million barrels vs previous week. Refinery utilization -3.4%

Forecasts: crude oil -1.400 ; distillates +0.5 ; gasoline +2.2 million barrels vs previous week.

Houston (ex-wharf indications 20/1)

380 cst $507
180 cst $538
MDO $784

Very tight avails for 180 cst

New Orleans (ex wharf indications 20/1)

380 cst $509
180 cst $540
MDO $788

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

Crude is gaining bearish momentum with WTI -$1.86. Singapore paper is mirroring it with Feb -$3.70 for 180 cst and -$3.40 for 380 cst, and for Mar 180 cst -$3.70 and 380cst -$3.40 with MGO Feb contracts at -$0.26 and for Mar at -$0.24. The cargo market is starting to react with 180cst -$1.68, 380cst -$2.27 and MGO -$0.92.

Prices in Asia lost much less as crude levels were higher during Singapore Platts window. No major changes in market fundamentals were reported from Singapore.Bunker fuel swaps were down by more than $7/mt in the front both in Rotterdam and Singapore. The backend of the curve was even weaker losing almost $10/mt. The forward curve structure has flattened considerably making prices at the back of the curve relatively attractive. Calendar 2012 papers are traded at the premium of $8/mt only against the balance of 2011. Both markets are currently traded higher pricing in this morning’s recovery of the crude values.

High premiums for prompt deliveries.

380 cst $544
180 cst $552
MDO $828

Fujairah (delivered indications 21/1)

380cst: $545
180cst: $585
MGO: $885

Rotterdam (delivered indications)

Yesterday, (only barge trade deals of >2 KT reported in the MOC): 24KT was traded between 503.00-505.00 with Litasco as the main seller to Verbeke as the main buyer.

The Asian arbitrage is open still, but a firm backwardation structure in the Singapore market and healthy inlux of Russian blending product are tempering the bullish sentiment. The Med-Asian arbitrage economics also firmed, with an uptick in reported fixtures. 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: $512
(1.0%): $523
180cst: $528
(1.0%): $535 (very low avails)
MGO 0.1%S: $821