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Technical indicators: neutral to bearish

Oil prices softened this morning on a stronger dollar and profit taking. They have been far from testing their first supports, however, and are currently gaining some ground again. Due to the national holiday in the USA on Monday, API data will published no sooner than 10.30 p.m. this evening, the DOE data will published at 5 p.m. on Thursday

After the US holiday on Monday, oil futures initially traded soft on Tuesday morning. Some profit taking weighed on prices, but the tendency changed around noon. After WTI Crude breached its key resistance at 95.85 dollars in the early afternoon, further technical buying was triggered. Speculators liquidated spread positions. In the course of the evening ICE futures breached important resistances as well, ICE Gasoil at 934.74 dollars and Brent 113.50 dollars, triggering even more technical buying orders. Later in the evening, the downgrade of Portugal caused some profit taking regarding the Euro, however, restraining the upward dynamics.

The euro was weighed down yesterday against the dollar, losing up to 1.5 Eurocent on disappointing EU economic data and on Portugal's downgrade by the rating agency Moody's. The agency downgraded Portugal's credit standing from Baa1 to Ba2. As a result the Euro breached several supports and stopped loosing gains only at about 1.44 dollars. Downward potential is limited, however, by the expected raise of interest rates by the ECB on Thursday. After recovering for a short term during Asian trade, the Euro is recently losing ground again.

ICE Gasoil contract for July settled at 928.50 dollars on Tuesday. This was 12.75 dollars above Monday's settlement. With some 49,900 contracts, the traded volume was slightly below average.

Given WTI Crude's transgression of the mark of 95.85 dollars, the stochastic indicator turned around again and is seen slightly bullish this morning. After oil futures have breached important resistances at ICE and NYMEX, there is some upward potential within the complex again. Analysts point to the overbought situation, making way for a short-term downward correction. However, they expect a testing of the upward potential first, with yesterday's intra-day high serving as a first preliminary resistance. The first support for the WTI crude is seen at 94.60 dollars, its first resistance at 97.70 dollars. The Brent's first resistance is seen at 114.45 dollars, its first support is at 111.00 dollars.

U.S.

Nymex Acces gaining. Oil futures slightly recover during electronic trading. The US Dollar returns from yesterday's intra-day highs in the early morning, supporting oil prices. The volume traded at NYMEX is about on average. Investors wait for the opening of the European markets as well as on new impetus from stock and foreign exchange.

Survey of US petroleum inventories due out tonight at 22:30 (API) and Wednesday at 16:30 (DOE):

Crude oil -2.4; distillates +0.9; gasoline +0.2 million barrels vs previous week.

Houston (ex-wharf indications 5-7)

380 cst $642
180 cst $672
MDO $954

Very tight avails for 180 cst

New Orleans (ex wharf indications 5-7)

380 cst $644
180 cst $675
MDO $958

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

Crude is jumping up with WTI +$1.82. Singapore paper is reflecting the turn, gaining with +$9.20 for 180 cst and +$7.00 for 380 cst for Jul, and for Aug 180 cst +$8.46 and 380cst +$8.50 with MGO Jul contracts at +$1.20 and for Aug at +$1.14. The cargo market is not yet responding, losing with 180cst -$5.76, 380cst -$5.40 and MGO -$1.16.

The Singapore fuel oil markets lost another -$5.0/mt during the Platts window yesterday. The delivered premiums hovered around $11.5/mt above cargo prices as softer outright prices attracted some buying interest. Bunker fuel swaps were assessed higher gaining steadily during the day Yesterday. Gains were more pronounced at the far end of the forward curve. As a result time spread between front month and calendar 2012 lost approximately one dollar. Singapore market was a little stronger compared to Barges adding $1 to East/West. This morning markets are trading lower.

High premiums for prompt deliveries.

380 cst $655
180 cst $664
MDO $931

Fujairah (delivered indications 5-7)

380cst: $650
180cst: $681
MGO: $1040

Rotterdam

Indications for delivered bunkers:

380cst :$ 626
(1.0 %) :$ 688
180cst :$ 645
(1.0 %) :$ 710
MGO 0.1%S: $ 931