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Technical indicators: neutral to bullish

Oil prices hovered below $87 a barrel this morning after a report showed OPEC boosted crude output last month to a two-year high amid signs of growing global demand.

Yesterday, oil futures stayed in a tight lateral range in the first half of the day and started rising after the opening of NYMEX session only to fall back after the release of DOE data, showing across-the-board builds of US crude and product stocks. The WTI crude did not recover from this blow, record high US oil stocks weighing on the contract despite a draw in Cushing crude inventories. The Brent however rose above 102.00 dollars, supported by the ongoing tension in Egypt and tighter North Sea supplies, causing the spread between the benchmarks to widen to a record high of 15.41 dollars a barrel.

Officially, OPEC has kept its crude production quotas unchanged as oil has risen from the $70’s most of last year to a two-year high above $92 last week. Higher oil prices have helped fuel inflation and threaten to undermine the global economic recovery.

ICE Gasoil contract for February delivery settled at 853.25 dollars Wednesday night. This was 3.50 dollars above Tuesday's settlement. Volume with some 56,700 deals slightly above average.

The WTI crude chart still differs from the rest of the oil charts, which are all in clear uptrend. The two lines of the Stochastic indicator crossed Wednesday for all contracts, triggering a buying signal and making the indicator bullish, while the RSI is still seen neutral, yet ready to enter bullish territory. The first support for the WTI crude is seen at 86.70 dollars today, the first resistance at 87.80 dollars. The brent's first support is at 101.40 dollars, the first resistance at 102.25 dollars.

U.S.

Nymex Acces flat: Oil futures are flat in Asian trading hours and electronic Globex trade this morning, the brent contract for March delivery lingering below 102.00 dollars for a barrel while the more actively traded April contract is trading above this mark. The March contract will expire tomorrow. The traded volume is below average.

APIs: crude oil -0.558; distillates -0.538; gasoline +3.212 million barrels vs previous week. Refinery utilization +0.1%

DOEs: crude oil +1.898; distillates +0.288; gasoline +4.663 million barrels vs previous week. Refinery utilization +0.2%

Forecasts: crude oil +2.300; distillates -1.200; gasoline +2.000 million barrels vs previous week. Refinery utilization -0.2%

Houston (ex-wharf indications 9/2)

380 cst $547
180 cst $577
MDO $874

Very tight avails for 180 cst

New Orleans (ex wharf indications 9/2)

380 cst $549
180 cst $579
MDO $878

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

Crude is gaining bearish momentum, losing with WTI -$1.20 Singapore paper is bullish still with +$5.65 for 180 cst and +$4.95 for 380 cst for Feb, and for March 180 cst +$5.35 and 380cst +$4.75 with MGO Feb contracts at +$1.11 and for Mar at +$1.08 The cargo market is tracking paper with 180cst +$4.07, 380cst +$2.19 and MGO +$1.06.

The Singapore fuel oil markets were up again by more than $2.00/mt during the Platts window yesterday. The strong buying interests in the fuel oil swaps continue to firm the Asian fuel oil crack. The short term tight supply is still supporting the market with high cargo and bunker premium. The delivered bunker premiums remained high; assessed at $15.00-21.00 above cargo prices yesterday. Bunker fuel swaps gained more than $4.00 along the curve in Rotterdam and even more in Singapore. Back end of the curve remains slightly weaker for both papers. Both markets are trading higher today.

High premiums for prompt deliveries.

380 cst $599
180 cst $611
MDO $870

Fujairah (delivered indications 10-2)

380cst: $623
180cst: $663
MGO: $938

Rotterdam

Indications for delivered bunkers:

380cst: $546
(1.0%): $558
180cst: $570
(1.0%): $581 (very low avails)
MGO 0.1%S: $864