Oil futures lingered yesterday in electronic morning trading, moving in a narrow range as market participants were waiting for US inventory data and the results of the FOMC meeting to give direction. When the DOE reported that crude stocks fell much more than forecast, oil surged, breaching several short-term resistance lines at ICE and NYMEX. The easing dollar lent additional support and the upside momentum was only stopped short of the gasoil contract's psychological 950,00 dollar resistance. When the Federal Reserve later announced its plans to buy 400 billion dollars of long-term debt and said there are significant downside risks to the economic outlook, the safe-haven dollar soared and oil prices collapsed during NYMEX session and in after-hour trading. WTI crude dropped to its 85.00 dollar support that was eventually breached in Asian trading hours this morning. The Stochastic indicator remains bearish on all charts this morning. The bearish fundamentals initiated a downward correction Wednesday. After short-term support lines were breached, technical selling orders were triggered and medium-term supports came within reach. Oil prices will most likely face further downside pressure until 915,00 dollars for ICE gasoil and 108,00 dollar brent. WTI crude might find support at 83,30 dollars. Should these support lines be breached, more technical selling orders will push oil futures even further down. The first support for the WTI crude is seen at 83,90 dollars, its first resistance at 85,95 dollars. The Brent's first resistance is seen at 110,35 dollars, its first support is at 108,00 dollars.
ICE Gasoil contract for October delivery settled at 945,25 dollars on Wednesday. This was 6,25 dollars above Tuesday's settlement. With some 62.000 contracts the traded volume was above average.
Survey of US natural gas storage volumes according to EIA to be released later today for the week till September 16th: +91,00 bcf (billion cubic feet) vs the previous week.
The Federal Reserve will replace 400 billion dollars of short-term debt in its portfolio with longer- term Treasuries in an effort to reduce borrowing costs further and counter rising risks of a recession. The central bank will buy securities with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less. The action should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative. Chairman Ben S. Bernanke expanded the use of unconventional monetary tools for a second straight meeting after job gains stalled and the government lowered its estimate of second-quarter growth. Yields on 30-year Treasuries fell below 3 percent for the first time since 2009 and U.S. stocks had their biggest drop in a month on the Fed’s plan.
Pacific Rubiales will end today its "force majeure" declaration on its oil-supply contracts as workers agreed to end the protests that forced the company to halt production earlier this week in two of Colombia's largest oil fields. Pacific Rubiales will restart oil production immediately, although it may take as much as three days to return to full output. As labor protests turned violent Tuesday and erupted into clashes with police forces, the company was forced to halt output at its Rubiales and Quifa oil fields, which together represent 225.000 barrels a day in oil production. The protesters were demanding better working conditions as well as more jobs for local residents.
Total SA plans to resume oil production at its Al Jurf oil field still this week, so a company official, making it the first foreign company to resume crude output after the end of the civil war. Al Jurf relies on an offshore platform which was not damaged during the conflict. Production could be restored within 10 days of the restart to 41,000 barrels a day and exports would follow three weeks later, according to the spokesman.
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The Federal Reserve will replace 400 billion dollars of short-term debt in its portfolio with longer- term Treasuries in an effort to reduce borrowing costs further and counter rising risks of a recession. The central bank will buy securities with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less. The action should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative. Chairman Ben S. Bernanke expanded the use of unconventional monetary tools for a second straight meeting after job gains stalled and the government lowered its estimate of second-quarter growth. Yields on 30-year Treasuries fell below 3 percent for the first time since 2009 and U.S. stocks had their biggest drop in a month on the Fed’s plan.
The euro stays lower vs the dollar this morning, the greenback as a safe-haven currency profiting from investors' doubts that the announced measures of the FED will indeed bolster the economy. The dollar surged to a seven month high against major currencies boosted by the appeal of higher short-term rates on U.S. bonds after the U.S. Federal Reserve said it would shift its portfolio in favour of long-term debt. The dollar was also bolstered by "safe-haven" inflows, as the Fed failed to satisfy those hoping for bolder monetary easing, sending shares, commodities and risk-related currencies such as the euro tumbling. The euro is currently selling at 1,3565 dollars, close to a 7-month low of 1,3496 dollars. The single currency has support at 1,3525 dollars, 1,3495 dollars and 1,3420 dollars. Resistances are at 1,36 dollars, 1,3630 dollars and 1,3760 dollars
U.S.
Nymex Access losing: Oil futures have steadied in East Asia and Globex electronic trade this morning, traders looking for direction after Wednesday's late losses. The traded volume is well above average. Market participants eye the release of US jobless data in the afternoon for further clues on the state of the economy.
Contrary to the data the API released on Tuesday, the DOE reported a sharp decline in US crude stocks. Refinery utilization has recovered from the production outages in the wake of tropical storms in the Gulf and refiners ramped up gasoline production.
As for the high draw in crude oil stocks, the data were seen as rather bullish, despite gasoline stocks climbed more than forecast. Demand for distillates rose (+0,217 mill bpd) while fuel demand remained unchanged (+0,010 mill bpd).
Houston (ex-wharf indications 21-9)
380cst $648
180cst $692
MGO $970
Very tight avails for 180 cst
New Orleans (ex-wharf indications 21-9)
380cst $651
180cst $696
MGO $975
Singapore (correct as of 1430hrs LT - delivered indications)
Crude is losing heavily after the US announcement with WTI now -$3.33. Singapore paper is reacting but not as much as expected with -13.05 for 180cst and -$12.75 for 380cst for Oct, and for Nov 180 cst -$13.05 and 380cst -$12.70 with MGO Oct contracts at -$3.21 and for Nov at -$3.21. The cargo market is still reacting to the slight counce resulting from the locking in off profits on short positions with 180cst +$5.10, 380cst +$6.11 and MGO +$0.05.
The Singapore fuel oil markets erased the previous loss, gaining more than $5.00 during the Platts window yesterday tracking crude. Market remains firm with strong buying supporting the cargo premium above $5.50 now. The delivered bunker premiums remained around $9.50 above cargo prices yesterday. Bunker fuel oil swaps app. $6.00/mt in the front of the forward curve both in Rotterdam and Singapore papers.
High premiums for prompt deliveries.
380 cst $640
180 cst $650
MDO $925
Fujairah (delivered indications 22-9)
380cst $650
180cst $670
MGO $1050
ARA (Amsterdam - Rotterdam - Antwerp)
Wednesday prompted by tight high sulfur fuel oil availability in Northwest Europe continued to see healthy demand Amsterdam-Rotterdam-Antwerp and stronger Brent crude in late afternoon. The last time the hub saw a string of VLCCs simultaneously loading, bunker premiums surged to as high as about $15/mt and avails are tightening sharply as a result of the current buying. In the MOC 1% 659-661 were the levels traded, with hs 639.75-642.50 levels traded.
Rotterdam
Indications for delivered bunkers:
380cst : $ 625
(1.0 %) :$ 647
180cst: $ 646
(1.0 %):$ 668
MGO 0.1%S: $ 919
