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Technical indicators: neutral to bearish

Crude prices are falling for a second consecutive day, ahead of an expected build-up in US inventories data, while a surprise 0.5 percent contraction in UK GDP fanned concerns about the global recovery.

Yesterday , Oil prices collapsed in late NYMEX session and after-hour trading as an expected rise in U.S. stocks, a possible OPEC quota hike and a weak technical outlook weighed on prices. The spread between the WTI crude and the brent temporarily widened to 10.00 dollars, making it worth for Southamerican oil producers to ship their products to Europe instead of the USA.

Contrary earlier comments, OPEC confirms they will increase this year's output by 2 percent as crude levels are seen approaching the 100 usd mark. Not all OPEC members were willing to up the output, but the organization wants to respond to the output increase of the non-OPEC countries.

ICE Gasoil February settled at 819.25 dollars (official settlement price) Monday night. This was 5.25 dollars above Friday's settlement. Volume with some 54,500 deals on average.

When the WTI crude fell through its first support line Monday, oil prices collapsed in a surprise sell-off, the crude contract hitting the lower limit of a medium-term downtrend. RSI and Stochastic indicators are both in oversold territory for most contracts this morning, paving the way for a short-term upward correction, which will be supported by the ailing dollar. Yet analysts reckon that the crude contract will try the lower limit of the medium-term downtrend again in the course of the days to come. The first support of the WTI crude is seen at 87.25 dollars today, the first resistance at 88.85 dollars.

U.S.

NYMEX gaining: Oil prices are flat in Asian trading hours and electronic Globex trade this morning, holding steady after Monday's hefty losses. The WTI crude lingers below 88.00 dollars for a barrel. The traded volume is above average.

Survey of US petroleum inventories data will be released today at 22:30, DOE data Wednesday at 16:30 crude oil +0.400; distillates +/- unchanged; gasoline +2.6 million barrels vs previous week. Refinery utilization: -0.8%.

Houston (ex-wharf indications 24/1)

380 cst $509
180 cst $550
MDO $813

Very tight avails for 180 cst

New Orleans (ex wharf indications 24/1)

380 cst $511
180 cst $553
MDO $816

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

Crude is dropping further with WTI -$1.78. Singapore paper is mirroring crude with Feb -$5.25 for 180 cst and -$5.25 for 380 cst, and for Mar 180 cst -$5.30 and 380cst -$5.30 with MGO Feb contracts at -$1.39 and for Mar at -$1.41. The cargo market is reacting to Yesterday's gains with 180cst +$4.46, 380cst +$5.30 and MGO -$1.41.

The Singapore fuel oil markets were up more than $3.50/mt recapturing yesterday's loss during the Platts window. Market has been pretty tight on lack of on specification bunker grade products. However, the situation is expected to gradually ease moving into next month. The delivered bunker premiums remain high ranging $14.0 to $17.0 above cargo prices yesterday. Bunker fuel swaps gained more than $6.00/mt at the front both in Rotterdam and Singapore. Backend of the curve was comperatively less up compared to the front, keeping forward curve structure relatively flat for the rest of 2011. Both markets are trading lower this morning.

High premiums for prompt deliveries.

380 cst $546
180 cst $558
MDO $824

Fujairah (delivered indications 25/1)

380cst: $553
180cst: $582
MGO: $880

Rotterdam (delivered indications)

Indications for delivered bunkers:

380cst: $514
(1.0%): $521
180cst: $529
(1.0%): $539 (very low avails)
MGO 0.1%S: $811