Oil prices already collapsed in Asian trading Wednesdy night, shrugging off bullish U.S. crude oil inventories as broader markets reacted negatively to the announcement of a fresh round of economic stimulus by the FOMC and a pessimistic outlook for economic growth. The slump in oil prices was a reaction to the U.S. Federal Reserve's announcement that it plans to sell 400 billion dollars of short-term Treasurys and buy longer-dated debt in order to bring longer-term interest rates down and stimulate economic growth. Market participants had hoped the Fed would add more bonds to its portfolio and pump more dollars into the economy, rather than merely shifting the duration of its debt holdings. After supports for the WTI Crude and the Brent remained strong this morning, oil prices made a correction upwards as technical analysts had expected. At ICE, prices even rose above the first resistances. As to fundamentals, they provided some impetus through the euro/dollar-parity. The market's pessimistic sentiment is likely to limit a surge of oil futures, however, considered that investor's risk appetite ahead of the weekend might remain curbed without any decisive indicators on the schedule. The technical constellation does not give any bullish momentum to the markets either. Meanwhile oil futures have erased earlier gains already.
When European markets opened and trading volume rose, oil futures continued to fall, following the steep slide in equities while the dollar extended its gains vs the euro. WTI crude and the brent fell through important support levels (83,30 dollars WTI and 108,00 dollars brent) triggering technical selling orders and raising the downside pressure. Morose indicators from the euro zone and more jobless claims than forecast in the US applied additional pressure. In after-hour trading the brent and the WTI even breached their key support levels at 80,00 dollars and 105,00 dollars before some short covering lifted futures from their intraday lows.
ICE Gasoil contract for October delivery settled at 903,75 dollars on Thursday. This was 41,50 dollars below Wednesday's settlement. With some 94.200 contracts the traded volume was well above average.
OPEC members are not concerned about the crude prices fall seen Thursday as it was mainly driven by speculators and is likely to be short-lived, so an OPEC official. The cartel is positive that prices will recover next week. Gulf oil producers are expected to keep their production around current levels until Libya's output recovers. The next official meeting of the cartel is scheduled for December. The maintenance work at the Buzzard oil field in the North Sea has has taken longer than expected, and this ongoing work resulted in a certain production volatility. Buzzard is the largest oil field that contributes to Forties crude, the main component of benchmark Brent used to price more than half of the world's oil. The proportion of Buzzard oil entering the system reached only 29% in the week ended September 18th, below the 35% level the company aimed at. Major Forties crude supply disruptions have been providing strong support to Brent futures prices this year, but ramp up efforts are under way, so a spokesman of the operator.
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 rose on profit-taking of short-term, short-risk positions this morning in East Asia after slipping to an eight-month low the previous day on the results of the FOMC meeting, but its gains could prove fleeting with market players focus' shifting back to the Euro zone debt crisis. Finance ministers and central bankers from the Group of 20 economies pledged on Thursday to prevent Europe's debt crisis from undermining banks and financial markets, and said the euro zone's rescue fund would be bolstered, adding that they would take all steps needed to calm the stresses wracking the global financial system. In addition to profit-taking, traders said the euro's rise gained momentum due to stop-loss bids. The euro regained some ground in the morning, currently selling at 1,3533 dollars vs 1,3466 dollars Thursday night in New York. The single currency has support at 1,3425 dollars, 1,3385 dollars and 1,33 dollars. Resistances are at 1,3570 dollars, 1,36 dollars and 1,3725 dollars .
U.S.
Nymex Access losing: Oil futures rose in East Asia and Globex electronic trade this morning, WTI crude gaining more than 1.00 dollar as speculators took the opportunity to buy on the dip after a plunge in the previous session took prices to their lowest since early August. The traded volume is well above average. As there are no important indicators on the agenda today, investors will take their clues from the dollar and equity markets.
Houston (ex-wharf indications 22-9)
380cst $625
180cst $669
MGO $920
Very tight avails for 180 cst
New Orleans (ex-wharf indications 22-9)
380cst $628
180cst $673
MGO $925
Singapore (correct as of 1430hrs LT - delivered indications)
Crude is losing again with WTI now -$1.83. Singapore paper is reacting but again not as much as expected with -$4.80 for 180cst and -$4.50 for 380cst for Oct, and for Nov 180 cst -$4.80 and 380cst -$4.50 with MGO Oct contracts at -$0.52 and for Nov at -$0.53. The cargo market is now fulling adotping the bearishness with 180cst -$13.14, 380cst -$13.00 and MGO -$3.21.
The Singapore fuel oil markets fell more than $13.00 during the Platts window yesterday tracking the weak crude. The Asian Fuel Oil crack firmed as buying interest still provide some level of support.
High premiums for prompt deliveries.
380 cst $635
180 cst $65
MDO $925
Fujairah (delivered indications 23-9)
380cst $650
180cst $670
MGO $1050
Avails issue are sustaining the market.
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 : $ 615
(1.0 %) :$ 639
180cst: $ 636
(1.0 %):$ 660
MGO 0.1%S: $ 916
