Oil prices posted modest gains in electronic morning trading on Monday, but lost considerable ground until midday in the wake of the euro and equity markets that were weighed down by profit taking after an increase in Italian borrowing costs deepened worries Europe will struggle to contain its sovereign debt crisis. When figures showed that industrial production in the euro zone dropped 2.0% in September after a 1.4% increase in August, oil futures fell below their first short-term supports, but still remained whithin their given trade margin. The brent and the WTI crude contracts for december delivery expiring soon (the brent contract expires tonight) and the overbought technical situation added to the bearish sentiment and encouraged investors to take more profit. Important support lines at 111,25 dollars for the brent and 96,90 dollars for the WTI proved strong, however, helping oil prices up from intraday lows. Oil prices did not keep track of the euro/dollar course and the development at stock markets but showed seperate dynamics during morning trade. While prices for heating oil, diesel and gasoline sharply rose, as investors expected sinking US inventories and a growing demand, crude oil prices traded sideways in a narrow range. Market participants are likely to remain cautious ahead of the expiry of the contract for Brent crude oil with december delivery this evening and of the contract for WTI crude on Friday. Currently crude oil as well as product futures are retreating, weighed down by a strong dollar and retreating equities.
The Stochastic oscillator at the crude oil charts in London and New York is slightly bearish this morning while the one at the G.Oil chart doesn't give any clear signals yet. The RSI and the Stochastic at the G.Oil and WTI chart signal an overbought market which could lead to more profit taking today. Yet technical analysts are rather neutral this morning, pointing out the solid support lines of the brent and the WTI. Only if these are breached for good, a selling signal would be triggered. But the downward correction is expected to be limited ahead of the DOE data on Wednesday as the figures had been regarded rather bullish lately. The WTI is supported at 97,50 dollars today, its first resistance is seen at 99,70 dollars. The Brent's first resistance is seen at 114,50 dollars, its first support is at 111,30 dollars.
ICE Gasoil contract for December delivery settled at 999,25 dollars on Monday. This was unchanged vs Friday's settlement. With some 70.700 contracts the traded volume was well above average.
OPEC members are split as concerns optimum production ahead of the next meeting of the cartel that is scheduled for the beginning of December. While Iran and some other members have called on OPEC to cut production which the cartel had increased to make up for lost Libyan crude, Kuwait is in favour of a rise in output quota. Due to the rising demand, Kuwait's production has crossed the 3 million barrels per day mark and the market still needs more oil, so the country's oil minister Mohammad Al-Busairi. But recent estimates showed that Kuwait produced only 2.680 million barrels per day in October, unchanged from a month earlier. Only Saudi Arabia, the United Arab Emirates and Kuwait--which is still on target to lift its output to 4 million barrels per day in 2020--have the capacity to lift production to meet the expected rise in demand. Kuwait still supports an increase in OPEC output and believes that a cut will push prices higher which will harm the global economy. Any cut in production would trigger a big increase in prices which would not alleviate the economic crises in Europe and the United States and would leave a negative impact on producers and consumers, so says the minister.
The euro declined for a second day, yesterday, after data regarding the Euro zone's industrial production emerged disappointing and after German Chancellor Angela Merkel's party (CDU) discussed the possibility that indebted countries might voluntarily leave the Euro zone. Member states would be allowed to leave the euro without having to leave the EU. Experts say, this might help indebted countries to consolidate by depreciating their own currency. This rather stoked market players concern, however, and let Italian bond yields rise again. New impetus for the foreign exchange is expected to come from the EU ZWE economic sentiment. The euro last sold at 1,3600 dollars after 1,3631 dollars Monday night in New York. The single currency has support at 1,3575 dollars, 1,3520 dollars, 1,35 dollars and 1,3440 dollars. Resistances are at 1,3645 dollars, 1,3745 dollars, 1,38 dollars and 1,3845 dollars.
German gross domestic product (GDP) stands at +0.5% in the third quarter 2011 according to a first estimate
The ZEW indicator for Economic Sentiment regarding the Euro-zone stands at -59.1 in November after a reading of -51.2 in the previous month and economists' expectations of -55.3.
The German ZEW indicator for Economic Sentiment stands at -55.2 in November after a reading of -48.3 in October and economists' expectations of -52.5.
According to preliminary estimates, the Eurozone's trade balance showed a surplus of +2.9 billion euros in September, after a deficit of -4.4 billion euros in the previous month.
Euro zone gross domestic product rose 0.2% in the third quarter, as expected, after a 0.2% rise in the second.
U.S.
Nymex Access trading trading sideways: Oil futures are mixed in Asian trading hours and on Globex electronic trading platform this morning, as the WTI crude and the brent tracked the euro lower while G.Oil and the heating oil are supported ahead of the winter. The traded volume is about on average. Market participants are eyeing the release of a string of US and European indicators today.
Refinery utilization is expected only slightly higher as maintenance work has not yet been finished. The data are seen clearly bullish as experts expect high draws in US crude oil and product stocks.
API data will be released tonight at 10.30 p.m. DOE data Wednesday at 4.30 p.m.
Houston (ex-wharf indications 15-11)
380cst $669
180cst $719
MGO $1010
Very tight avails for 180 cst
New Orleans (ex-wharf indications 15-11)
380cst $672
180cst $722
MGO $1015
Singapore (correct as of 1430hrs LT - delivered indications)
Crude is losing on a slight recorrection with WTI -$0.64. Singapore paper is following crude with -$6.60 for 180cst and -$7.00 for 380cst for Nov, and for Dec 180 cst -$6.15 and 380cst -$7.00 with MGO Nov contracts at +$0.31 and for Dec at +$0.31. The cargo market is now losing some of the bullish momentum with 180cst +$2.45, 380cst +$1.37 and MGO +$0.76.
The Singapore fuel oil markets rose more than $1.00 during the Platts window yesterday tracking the crude. The Singapore heavy residual inventory saw a draw of -1.34 mbbl to 17.17 mbbl. Market fundamentals continue to be firm and demand robust. The delivered bunker premiums were at around $14.50 above the cargo prices yesterday.
High premiums for prompt deliveries.
380 cst $695
180 cst $702
MGO $980
Fujairah (delivered indications 15-11)
380cst $712
180cst $735
MGO $1045
Avails issue are sustaining the market.
ARA (Amsterdam - Rotterdam - Antwerp)
The high sulfur fuel oil tightness in the main Northwest European bunker hubs continued to trigger good buying interest despite bearish sentiment in the oil market, sources said Monday. Buyers in Amsterdam-Rotterdam-Antwerp remained keen to secure some volumes with ever tightening HSFO supplies prompted by one VLCC loading in Rotterdam and some shortages, sources said. Demand is pretty good, but loading is still difficult due to shortages with some suppliers are already fully booked far into this week. Congestion at Rotterdam loading installations is only adding to the problem. Yesterday during the MOC 647-654 was traded on HS and 673-673.50 on LS.
Rotterdam
Indications for delivered bunkers:
380cst : $ 653
(1.0 %) :$ 676
180cst: $ 676
(1.0 %):$ 699
MGO 0.1%S: $ 1005
