Oil futures lost ground Wednesday in electronic morning trading, the brent and the gasoil at the ICE hitting first support lines early in the day. Supported by the rise in the euro and recovering European equity markets prices were set for a technical upward correction when the supports proved strong. While a string of economic data released in the afternoon didn't have much influence on oil prices, the inventory data by the DOE gave oil markets strong momentum. At first, futures collapsed, falling through several support lines and triggering more and more technical selling orders in the process. Later in the session, investors thought better and the strong performance of Wall Street and a strongly rising euro helped the oil complex compensate earlier losses except for the WTI crude that was depressed by stalling US retail sales, a decline in demand and the strong build in fuel inventories.
The Stochastic indicator at the WTI crude and the gasoil chart is neutral this morning, while the one at the brent chart is still giving some bearish signals (should the red and the black line cross, a selling signal is triggered). After the 110,80 dollar support for the brent had proved strong Wednesday, the line is seen as vital for today's development. The technical constellation being without momentum for the time being, technical analysts see oil prices consolidating in the morning. But should the brent's 110,80 dollar support be breached, technical seeling orders would be triggered and the contract could fall as low as 109,00 dollars, so analysts. The first support for the WTI crude is seen at 88,20 dollars, its first resistance at 90,00 dollars. The Brent's first resistance is seen at 112,40 dollars, its first support is at 110,80 dollars.
After some technical lines had been breached, oil futures have reached new intra-day highs. The stochastic indicator showed a buying signal for the Brent and the Gasoil at ICE. However, psychological resistances have not been breached yet. After a rather calm trade in the early morning, when oil futures traded sideways in a narrow marge, they gained considerable ground around noon, breaching several resistances lines. Along with bullish fundamental momentum - as the stronger euro and gaining equities - technical buying is considered to have been the main impetus. This has been triggered, after charts showed the stochastic indicator giving a clear buying signal for the ICE futures as well as for Heating Oil in New York. The WTI crude's gains are still limited, however. As to this, the stochastic indicator has not given any signal yet. Further upward potential for the New York crude variety is likely to develop only above the important mark of 90 dollars. In some comments, analysts with Goldman Sachs revealed a still bullish assessment of the development of the commodity market, which added to investors' sentiment.
ICE Gasoil contract for October delivery settled at 924,75 dollars on Wednesday. This was 2,75 dollars below Tuesday's settlement. With some 69.300 contracts the traded volume was above average.
Euro zone inflation remained unchanged at 2.5% in August 2011, as was expected, compared to the previous month and 1.6% in August 2010.
The euro slipped in Asia this morning, with initial relief over assurances from Germany and France about keeping Greece in the euro bloc wearing off amid scepticism over whether euro zone policymakers can really help Athens avoid default. The 17-nation currency is under pressure as market players, spooked by fears that a possible debt default in the euro bloc could unleash a major financial crisis, remain ready to sell the euro and risk assets into any rally. The euro had initially regained ground on Wednesday after a joint statement from Germany and France helped bolster hopes that Greece will receive the next tranche of aid from the EU/IMF and avoid imminent default. But there were no new steps, so the conference call did not offer any fresh reason to buy the euro.
The euro is currently selling at 1,3723 dollars compared to 1,3750 dollars Wednesday night. The single currency has support at 1,37 dollars, 1,3630 dollars and 1,36 dollars. Resistances are at 1,3785 dollars, 1,38 dollars and 1,3825 dollars. Many traders expect the euro to eventually test Monday's seven-month low just below 1.35 dollars.
U.S.
Nymex Access trading sideways: Oil futures are in a narrow lateral range in East Asia and Globex electronic trade this morning, holding their breath after Wednesday's volatile session. The easing euro might provide some bearish momentum. The traded volume is on average. A bunch of economic indicators and equity markets are expected to give direction today.
US petroleum inventories: DOE data released Wednesday confirmed the API's big draw in crude oil stocks and a heft decrease in refinery utilisation while product stocks unexpectedly rose:
The high draw in crude oil stocks gave a clear bullish signal but its influence on oil prices was limited as the decrease didn't catch market participants by surprise. So investors' focus was on product stocks that were seen clearly bearish, given the slowdown in demand (gasoline -0,108, distillates -0,195 mill barrels per day) that is also mirrored by the drop in refinery utilization.
Houston (ex-wharf indications 14-9)
380cst $630
180cst $674
MGO $940
Very tight avails for 180 cst
New Orleans (ex-wharf indications 14-9)
380cst $634
180cst $678
MGO $945
Singapore (correct as of 1430hrs LT - delivered indications)
Crude is losing although not as much as it was earlier with WTI now -$0.49. Singapore paper is coming back with +$5.65 for 180cst and +$5.30 for 380cst for Sept, and for Oct 180 cst +$5.65 and 380cst +$5.30 with MGO Sept contracts at +$0.85 and for Oct at +$0.86. The cargo market is mirroring with 180cst +$5.70, 380cst +$6.30 and MGO +$0.86.
The Singapore fuel oil markets erased the previous day gains by losing more than $5.00 during the Platts window yesterday. Demand remains sensitive to outright prices amidst a volatile market.
High premiums for prompt deliveries.
380 cst $640
180 cst $650
MDO $925
Fujairah (delivered indications 15-9)
380cst $660
180cst $675
MGO $1065
Rotterdam
Indications for delivered bunkers:
380cst : $ 635
(1.0 %) :$ 660
180cst: $ 652
(1.0 %):$ 677
MGO 0.1%S: $ 952
