Oil futures lost ground in electronic morning trading, weighed down by a strengthening dollar that rose after the sale of italian bonds disappointed market observers. When the euro rose after a 1,3560 dollar support proved strong, oil's selloff was halted. While the WTI crude rose as high as 90,52 dollars, supported by expectations of bullish API data, ICE futures kept easing to settle at intraday lows and only reversed part of their losses in after-hour trade. The brent-WTI spread dropped below 22 dollars. After oil prices retreated in the morning, with ICE futures testing their first supports, they have been able to pare some of these losses again later. The strong dollar and sinking equties at the opening of European places gave some bearish momentum. As stock markets have recovered again, oil futures have also gained some ground. Markets are rather volatile, however, and so prices are currently edging lower again.
ICE Gasoil contract for October delivery settled at 924,75 dollars on Tuesday. This was 8,50 dollars below Monday's settlement. With some 105.100 contracts the traded volume was clearly above average.
The OECD leading indicator of economic activity in its 34 members fell to 101.6 in July from 102.1 in June, suggesting that economic growth is likely to continue to slow. The OECD data shows activity has been turning lower in the U.S., the euro-zone, Germany, China and India in recent months.
Libyan oil officials Tuesday said its Arabian Gulf Oil Co., or Agoco, which operates in the country's east, was already producing 160,000 barrels of crude a day, more quickly than expected, and is set to resume oil exports within a week. The Agoco oil is the first new oil to flow in Libya after six months of fighting toppled Col. Moammar Gadhafi. Libya's transitional government is eager to sell oil again to raise money for postwar reconstruction. Before the fighting began this year, Libya had pumped 1.6 million barrels of oil a day.
A leak from a shallow water crude oil pipeline in the Main Pass Area of the Gulf of Mexico has led Chevron to shut down its offshore Louisiana Main Pass pipeline network, the company stated on Tuesday. Chevron has also shut its Cypress line, the company said. About 15,000 barrels per day (bpd) of crude oil production was shut in due to the pipeline leak, Chevron said. The company said late on Tuesday it will resume partial production within 24 hours. Chevron did not give any further informations as to its operations in the Main Pass Area and the leak.
Both the U.S. Coast Guard and the Louisiana Oil Spill Coordinator's Office said they had not been informed of a leak off the coast.
Chevron has two offshore platforms in the Main Pass 299 block, according to the company's website. The site is located in shallow waters about 40 miles east of Venice, Louisiana, and has produced heavy oil, natural gas and sulfur, according to government records. Chevron said the leak was from a 10-inch riser pipelines in Main Pass Block 299. Riser pipelines normally carry crude from the seabed to production platforms.
Chevron also shut its line known as Cypress since "Main Pass is the only connecting pipeline system currently providing volumes into Cypress," the company said. The Cypress pipeline feeds a crude terminal known as Empire on the Mississippi River in Louisiana, delivery point for cash crude Heavy Louisiana Sweet. Empire usually handles between 230,000 and 275,000 barrels a day, according to Chevron's website.
The Empire terminal was still operating, a trade source said, although it wasn't clear whether flows into the terminal had been disrupted. The Gulf of Mexico was the site of the worst-ever U.S. offshore oil spill last year when BP's Macondo well released more than 4 million barrels of crude from a blown out well offshore Louisiana.
Industrial production in the euro zone rose 1.0% in July, compared to -0.8 the previous month (revised figure), when economists expected a 1.5% rise.
The euro weakened versus the yen for a fifth day after China’s Premier Wen Jiabao signaled developed nations should cut deficits and create jobs rather than relying on his country to bail out the world economy. The single currency tumbled to a seven-month trough of 1.3499 dollars earlier this week. Markets had been spooked in recent days by renewed talk among euro zone policymakers of an imminent default by Greece, prompted by the country's failure to meet the fiscal goals set out in its European Union/IMF bailout. The 17-nation currency had jumped more than a cent in the previous session on news of a conference call of Greek Prime Minister George Papandreou with French President Nicolas Sarkozy and German Chancellor Angela Merkel today.
The euro is currently selling at 1,3628 dollars compared to 1,3682 dollars last night in New York. The single currency has support at 1,36 dollars, 1,3560 dollars and 1,3495 dollars. Resistances are at 1,3705 dollars, 1,3735 dollars and 1,3785 dollars.
U.S.
Nymex Access losing: Oil futures are losing ground in East Asia and Globex electronic trade this morning, trading below Tuesday's lows, as the dollar strengthens and anxiety over the euro zone debacle rises. The traded volume is above average. Market participants eye the release of DOE and some economic indicators in the afternoon.
Survey of US petroleum inventories:
US crude stocks fell more than expected last week and refinery utilization dropped due to shutdowns owing to tropical storm Lee. Gasoline stocks rose a surprise 2.8 million barrels which is due to a 2.7% decrease in US gasoline use last week (according to MasterCard SpendingPulse). This is the lowest level since February 2011. Due to the high draw in crude stocks, the data are seen slightly bullish.
DOE data are going to be released later today at 4.30 p.m.
Houston (ex-wharf indications 13-9)
380cst $635
180cst $679
MGO $930
Very tight avails for 180 cst
New Orleans (ex-wharf indications 13-9)
380cst $638
180cst $682
MGO $935
Singapore (correct as of 1430hrs LT - delivered indications)
Crude is slowing now and looks like turning south again with WTI now +$0.24. Singapore paper is already heading south with -$5.06 for 180cst and -$5.50 for 380cst for Sept, and for Oct 180 cst -$5.15 and 380cst -$5.570 with MGO Sept contracts at -$0.39 and for Oct at -$0.35. The cargo market is now just reacting to the bounce on paper and crude yesterday with 180cst +$5.26, 380cst +$4.74 and MGO +$0.69.
The Singapore fuel oil markets rose more than $5.0/mt during the Platts window yesterday tracking crude. This month incoming is estimated at 2.5 million mt while October arbitrage seems to be heavier in comparison to total around 3.5 million mt. The delivered bunker premiums were around $9.00/mt above cargo prices yesterday. Front month bunker fuel swaps lost another $4.5/mt both for Rotterdam and Singapore papers.
High premiums for prompt deliveries.
380 cst $645
180 cst $660
MDO $935
Fujairah (delivered indications 14-9)
380cst $652
180cst $665
MGO $1060
Rotterdam
Indications for delivered bunkers:
380cst : $ 626
(1.0 %) :$ 647
180cst: $ 651
(1.0 %):$ 673
MGO 0.1%S: $ 935
