Oil prices rose on Friday within their technical uptrend after concerns over the Euro zone debt crises eased when Silvio Berlusconi announced his resignation and a positive US consumer sentiment index raised hopes on an increase in demand. The rally was supported by technical buying orders after oil prices breached several resistance lines in the wake of equity markets and the euro. Oil futures settled near their intraday highs but the upper limits of the uptrends (115,00 dollars for the brent and 99,85 dollars for the WTI crude) were not yet hit. Oil and financial markets were highly influenced by Euro zone news also in the past week, so consequently the steps taken in Italy and Greece raised confidence among traders even though analysts warn that political measures are inappropriate to support oil prices for more than a few weeks. Nevertheless easing concerns over Europe's debt crisis and some positive US indicators tempt market participants to bet on rising oil demand during the winter months. Meanhwile OECD oil stocks fell to 57.9 days of forward cover below its 5 year average. US oil stocks are down 6.9% below the long-term average with distillate stocks at a 4 year low ahead of the heating-oil relevant winter season. The Stochastic and RSI indicators are not giving any clear signals this morning but oil prices are still in uptrend, although at the overbought level. Traders maintain a bullish stance this morning but given the overbought markets, a technical downward correction would be triggered should the indicators give a selling signal. The WTI is supported at 97,35 dollars today, its first resistance is seen at 100,00 dollars. The Brent's first resistance is seen at 114,90 dollars, its first support is at 113,00 dollars.
ICE Gasoil contract for December delivery settled at 999,25 dollars on Friday. This was 20,75 dollars above Thursday's settlement. With some 86.100 contracts the traded volume was well above average.
In Greece, the new Prime Minister Lucas Papademos will have to win Wednesday's confidence vote in his cabinet before meeting euro zone finance ministers in Brussels on Thursday. Following Italian Prime Minister Silvio Berlusconi's resignation, former European Commissioner Mario Monti was asked on Sunday to form a new government to restore market confidence, and today's bond auction will be seen as an initial judgment on his leadership.
Former European Union Competition Commissioner Mario Monti will lead the new government as Italy reaches outside the political arena for a leader to restore confidence in its ability to cut the euro region’s second- biggest debt. President Giorgio Napolitano offered Monti, 68, the post last night in Rome, less than 24 hours after Prime Minister Silvio Berlusconi resigned. Berlusconi’s government unraveled after defections ended his parliamentary majority and the country’s 10-year bond yield surged over the 7 percent threshold that prompted Greece, Ireland and Portugal to seek EU bailouts. “In a particularly difficult moment for Italy, in a very turbulent European and international landscape, the country must prevail in the challenge of redemption,” Monti said last night after meeting Napolitano in Rome. “Italy must once again be an element of strength, not of weakness, in the European Union, which we helped found and in which we must be protagonists.” Europe’s inability to contain a regional debt crisis that started in Greece more than two years ago led to a surge in Italian bond yields as investors bet on which nation may need aid next. Monti, an economist and adviser to Goldman Sachs Group Inc., will try to reassure investors that Italy can cut a 1.9 trillion-euro debt load and spur economic growth that has lagged behind the euro-region average for more than a decade. Italy has a tradition of reaching outside parliament for leaders to run so-called technical governments at times of political crisis. Monti, who did his graduate work in economics at Yale University, spent almost a decade in Brussels as EU commissioner and has been running the Bocconi University in Milan, the country’s top business school, since 1994. Berlusconi is the fourth leader of a southern EU country to be brought down by fallout from the debt crisis, with new administrations pledging to impose austerity measures demanded by the union and the International Monetary Fund. Monti must present the names of his Cabinet ministers to Napolitano before he can be sworn in. He will then face confidence votes in both houses of parliament. Leaders of Berlusconi’s People of Liberty party told Napolitano yesterday they’ll support a Monti government, virtually ensuring his confirmation, which may come this week. Monti said he will focus on improving public finances and boosting economic growth, and he pledged to decide on his Cabinet as quickly as possible. Press speculation about who will be in the Cabinet is “pure fantasy,” he said. European Commission President Jose Barroso and EU President Herman Van Rompuy welcomed Napolitano’s decision to offer Monti the chance to lead Italy’s government. “We believe that it sends a further encouraging signal,” following Italy’s “swift adoption” of the budget law, they said in an e-mailed statement yesterday.
* Industrial production in the euro zone dropped 2.0% in September, compared to +1.4 the previous month (revised figure), when economists expected a 2.2% decrease.
U.S.
Nymex Access trading gaining: Oil prices are edging modestly higher in Asian trading hours and on Globex electronic trading platform this morning, the Brent holding above 114 dollars, extending the previous week's gains on hopes of growing demand as concerns over Europe's debt crisis eased. The traded volume is about on average.
Houston (ex-wharf indications 14-11)
380cst $673
180cst $723
MGO $1000
Very tight avails for 180 cst
New Orleans (ex-wharf indications 14-11)
380cst $678
180cst $728
MGO $1005
Singapore (correct as of 1430hrs LT - delivered indications)
Crude is still firm with WTI +$0.53. Singapore paper is lacking bullish momentum now with +$2.75 for 180cst and +$2.75 for 380cst for Nov, and for Dec 180 cst +$3.45 and 380cst +$2.30 with MGO Nov contracts at +$0.75 and for Dec at +$0.70. The cargo market has now fully adopted the bullishness from the end of last week with 180cst +$9.94, 380cst +$8.74 and MGO +$2.18.
The Singapore fuel oil markets erased previous loss and gained more than $9.00 during the Platts window last Friday. The fuel oil swaps market continued to be well supported by strong buying interest in fuel oil swaps. The delivered bunker premiums were tempered to around $13.50 above the cargo prices. Bunker fuel swaps were up app. $9.75- 4.50/mt along the curve, remaining higher at the front. Prices in Singapore stay stronger compared to Rotterdam keeping front month East/West spread above $40.00/mt.
High premiums for prompt deliveries.
380 cst $707
180 cst $715
MGO $980
Fujairah (delivered indications 14-11)
380cst $717
180cst $743
MGO $1050
Avails issue are sustaining the market.
ARA (Amsterdam - Rotterdam - Antwerp)
The Northwest European market bunker market softened Yesterday, tracking week fuel oil demand. Rotterdam and Antwerp remain very tight and experience ongoing HSFO shortages. Tight HSFO supplies on a recent VLCC loading for Singapore continued to trigger operational delays at loading installations in Rotterdam. In the MOC 1% was traded between $ 679-680 with hs $ 651-653 levels traded.
Rotterdam
Indications for delivered bunkers:
380cst : $ 657
(1.0 %) :$ 687
180cst: $ 683
(1.0 %):$ 707
MGO 0.1%S: $ 1012
