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Oil futures lost ground in electronic morning trading as investors abandoned the euro, sending it to a seven-month low against the dollar on concerns of a Greek default. The bearish technical constellation and slumping European equities also tempted traders to take profit. When the psychologically important 85.00 dollar mark of the WTI crude proved strong, however, oil futures pared earlier losses after the opening of the session in New York to hit intraday highs. In late NYMEX session the heating oil and gasoline contract shed most of their gains, dragging ICE futures along. Only the WTI crude was being supported by speculation crude stockpiles in the US shrank last week after tropical storm Lee curtailed offshore production. The spread between the US crude and the Brent shrank to around 24,00 dollars, the smallest since August 23rd. . After having opened steady, European stock markets have been under pressure again this morning. The DAX renewedly fell below 5000 points. Oil futures have followed this track, marking new intraday-lows. The temporarily sharply advancing dollar also weighed. Currently, stock markets are slightly recovering again.

ICE Gasoil contract for October delivery settled at 933,25 dollars on Monday. This was 5,50 dollars below Friday's settlement. With some 96.800 contracts the traded volume was well above average.

The Organization of Petroleum Exporting Countries trimmed its 2011 and 2012 oil demand forecast due to the weakening economy, though the group hinted that some of its members could reduce production as a slowing economy dents oil demand. The semi-autonomous Kurdish area has resumed shipment of approx. 180.000 barrels of crude a day to Iraq. The Kurds had halted oil exports over the weekend due to technical problems, so goes the official version of the Iraqi government.

IEA monthly energy outlook:

• 2011 global oil demand revised down by 200.000 bpd to 89.3 mbpd
• 2012 global oil demand revised down by 400.000 bpd to 90.7 mbpd
• Libyan oil production is seen between 350,000 and 400,000 bpd by the end of 2011 and 1.1 mbpd by the end of 2012.

The euro, falling to a decade low versus the yen, weakened versus the dollar on speculation Greece is nearing default and as Italy sold 3.9 billion euros of bonds amid signs the region’s debt crisis is worsening. The common currency reversed yesterday’s gain against the dollar amid uncertainty China will buy Italian assets, as borrowing costs in the euro region’s third-largest economy surged. The Rome-based Treasury sold 3.9 billion euros of a new benchmark five-year bond at an average yield of 5.6 percent, compared with 4.93 percent on July 14, the last time securities of a similar maturity were sold. The Treasury had aimed to sell a maximum of 4 billion euros.

Only yesterday, the euro was boosted after an Italian government official said talks had been held with Chinese counterparts about potential investments in the economy. The purchase of Italian bonds was not the focus of the meetings, which took place in the past few weeks, the official said on condition of anonymity, without specifying which assets may be involved. After having hit 1,3558 dollars in the morning, the euro is currently selling again at 1,3671 dollars.

U.S.

Nymex Access gaining: Oil futures trade in a narrow range in East Asia and Globex electronic trading this morning for lack of direction. the WTI crude is probing its first resistance line. The traded volume is on average.

Survey of US petroleum inventories:

Analysts expect a big draw in US crude stocks and a decrease in refinery utilization due to supply disruptions because of tropical storm Lee. Gasoline inventories are seen lower due to the long US weekend, even though the US driving season officially ended on Labour Day.

Houston (ex-wharf indications 12-9)

380cst $640
180cst $684
MGO $970

Very tight avails for 180 cst

New Orleans (ex-wharf indications 12-9)

380cst $643
180cst $687
MGO $974

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

Crude is bouncing +$1.33. Singapore paper is reflecting this with +$5.25 for 180cst and +$4.50 for 380cst for Sept, and for Oct 180 cst +$5.25 and 380cst +$0.70 with MGO Sept contracts at +$0.70 and for Oct at +$0.70. The cargo market is now catching up the losses of the last days on paper with 180cst -$24.56, 380cst -$23.91 and MGO -$4.15.

The Singapore fuel oil markets dived by more than $24.0/mt during the Platts window yesterday. The delivered bunker premiums climbed to around $11.00/mt above cargo prices yesterday as sellers become reluctant to sell on much lower outright prices. Bunker fuel swaps were assessed down by approx. $4.25/mt along the curve both for Rotterdam and Singapore papers.

High premiums for prompt deliveries.

380 cst $635
180 cst $650
MDO $935

Fujairah (delivered indications 13-9)

380cst $655
180cst $675
MGO $1060

Rotterdam

Indications for delivered bunkers:
380cst : $ 628
(1.0 %) :$ 650
180cst: $ 648
(1.0 %):$ 670
MGO 0.1%S: $ 931