Technical indicators: bullish
Oil futures initially traded sideways in a tight range on Monday morning, before breaching first temporary supports in the early afternoon. Particularly futures at the ICE dropped on profit taking, whereas the supports for WTI Crude proved strong. According to investors, the main reason for the dip at ICE is the US debt crisis. Given the still unresolved situation and the nearing deadline for raising the debt ceiling, market participants fear a downgrade of the US' credit ranking by major rating agencies and bearish impetus on the US oil demand. The strong resistances regarding WTI Crude, but also the dollar's downward tendency lifted oil prices again in the course of the day and allowed them to pare their losses. The US currency hardly changed against the Euro. Against safe-haven currencies as the Swiss Frank and the Yen, however, the greenback lost considerable ground. In all, oil futures settled slightly lower on Monday, staying within their medium term range. Oil futures rose this morning after President Barack Obama’s warning that the U.S. debt stalemate might damage the economy curbed the dollar. ICE Gasoil and Brent have already breached some resistance lines.
ICE gasoil for August delivery is expected to open -2,50 to -4,00 dollars down at about 975,50 dollars/ton after settling at 978,75 dollars Monday night. This was 4,00 dollars below Friday's settlement. Volume with some 29.300 contracts far below average.
The dollar fell versus the euro as President Barack Obama said the burgeoning U.S. debt might do “serious” damage to the economy. The U.S. currency sank to a three-week low against the euro as Obama urged Congress to address future deficits while lawmakers struggle to reach an accord to raise the nation’s 14.3 trillion dollars debt ceiling by an Aug. 2 deadline. Obama called on lawmakers to put politics aside to reach a deal on a “balanced” approach and blamed the current stalemate on a group of Republicans in the House who are insisting on budget cuts and no tax increases.
“If we stay on the current path, our growing debt could cost us jobs and do serious damage to the economy,” Obama said in a prime-time address from the White House. House Speaker John Boehner and Senate Majority Leader Harry Reid unveiled their own proposals yesterday. Obama endorsed Reid’s plan and said that Boehner’s measure is simply “kicking the can further down the road.” Both sides will have to compromise further, Obama said.
“[...] a U.S. default will trigger an incident that’s too scary to imagine, so people can’t buy the dollar when there’s such a risk, however small,” said an online currency broker. “Currencies such as the Swiss franc or Japanese yen continue to be preferred.” Moody’s Investors Service yesterday downgraded Greece to its second-lowest rating. The European Union support package for Greece allows an “orderly default” and buys time, Moody’s said.
Adam Parker, analyst with Morgan Stanley, expects oil demand to rise higher than oil supply in the second half of the year, lifting prices to new highs for the year. Along with supply shortages (Libya), the demand will make prices for one barrel of Brent rise up to 130 dollars, Parker claims. Up to now, this year's high was at 127, 02 dollars.
In seperate news Indian refiners asked Saudi Arabian Oil Co. for at least one additional shipment in August as a payment dispute jeopardizes Iranian cargoes, four people familiar to the matter said yesterday. Iran has told customers in India that they won’t receive shipments next month unless outstanding bills are paid, according to the people, who asked not to be identified because they aren’t authorized to speak to the media. Indian refiners have said global sanctions against Iran over its nuclear program have made banks unwilling to transfer oil payments.
Iran may stop oil exports to India starting Aug. 1, state- run Fars news agency reported July 18, citing an unidentified official in the Oil Ministry. The country hasn’t issued export permits for crude shipments to India for August, Fars said. India owed 5 billion dollars for oil shipments, Iranian Central Bank Governor Mahmoud Bahmani said that day, according to the Islamic Republic News Agency.
Staff working for Ahmad Qalebani, managing director of National Iranian Oil Co. in Tehran, referred questions on the matter to Mohsen Qamsari, head of international affairs. Qamsari didn’t immediately respond to two calls to his office. Saudi Aramco, as the world’s largest crude exporter, has told refiners in India it can replace some of the Iranian crude, people with knowledge of the situation said earlier this month. The Dhahran-based company didn’t respond to an e-mailed request for comment.
India imports about 21 million metric tons of crude from Iran annually, making it the country’s second-biggest supplier after Saudi Arabia, a former Indian oil secretary, said in December. Total oil trade between India and Iran is worth 9.5 billion dollars a year.
R. Gopalan, a secretary in the department of economic affairs in India’s Ministry of Finance, declined to comment yesterday on the dispute. The biggest Indian buyer is Mangalore Refinery & Petrochemicals Ltd. (MRPL) Other purchasers of Iranian crude include Essar Oil Ltd. (ESOIL), Hindustan Petroleum Corp. and Indian Oil Corp. “Supplies are maintained based on an interim arrangement,” Mangalore Refinery, which buys about 7 million tons a year of crude from Iran, said in its 2010 annual report.
India voluntarily stopped channeling funds for Iranian oil through a bank in Germany, a government official said April 5. Iran hasn’t yet given Indian refiners loading dates or shipping amounts for August, three of the people familiar said yesterday. Iran typically provides this information by the middle of each month for the following month’s supplies, they said.
U.S.
Nymex Access gaining: Oil futures have slightly recovered during electronic morning trade. Investors have reacted to the significantly retreating US Dollar, losing ground also against the Euro. Trading interests at NYMEX have been on average. Market participants look ahead to the opening of the European markets, news regarding the US debt crisis, american economic indicators and data regarding the weekly oil inventories.
API's: Survey (in million bbls) -1.2 crude oil, distillates +1.6, gasoline +0.4, Refinery utilisation -0.1%
Houston (ex-wharf indications 25-7)
380 cst $656
180 cst $686
MDO $1015
Very tight avails for 180 cst
New Orleans (ex wharf indications 25-7)
380 cst $658
180 cst $689
MDO $1016
Singapore (correct as of 1430hrs LT - delivered indications)
Crude is gaining this morning after Obama's threat with WTI +$0.60. Singapore paper is mirroring, gaining with +$1.95 for 180cst and +$0.80 for 380cst for Aug, and for Sep 180 cst +$1.60 and 380cst +$0.70 with MGO Aug contracts at +$0.08 and for Sep at +$0.12. The cargo market is tracking paper gaining with 180cst +$4.88, 380cst +$3.59 and MGO -$0.24.
The Singapore fuel oil markets rose by more than +$3.5/mt during the Friday’s Platts window. The market seems to be amply supplied and demand has also been softened by the recent high price. The delivered premiums slipped to $5.0/mt above cargo prices last Friday. Bunker swaps gained few dollars in the front of the curve. Rotterdam papers were supported by a tight sport market gaining a little more than Singapore papers as a result. Backend of the curve was considerably weaker resulting in a small loss for 2012 papers. Both markets are trading slightly down this morning.
High premiums for prompt deliveries.
380 cst $685
180 cst $694
MDO $981
Fujairah (delivered indications 26-7)
380 cst $700
180 cst $742
MDO $1071
Rotterdam
Indications for delivered bunkers:
380cst : $ 667
(1.0 %) :$ 705
180cst: $ 689
(1.0 %):$ 745
MGO 0.1%S: $ 985
