Oil prices edged higher in electronic morning trading, hitting intraday highs early in the day but started to slide already before noon when the euro fell and declining European equity markets weighed. The further development must be regarded as a mere technical downward correction. Despite positive news from the US labour and housing market, a recovering euro and equities, oil prices continued to loose ground when important support lines were breached and RSI and Stochastic indicators gave additional selling signals and Wall Street's selloff prevented a late recovery. When the RSI indicator fell through the 70% line at all charts Thursday and oil prices left their uptrend channels, additional selling signals were triggered and more downside was revealed. The bearish Stochastic oscillator and the WTI's overbought chart accelerated the landslide. The brent's downward correction was not as hefty and the contract is already set to enter oversold territory, tempting analysts to take a neutral stance this morning. As yesterday's hefty collapse took most of the bearish potential away, oil prices are seen correcting a bit upwards before taking their clues from equity and forex markets again. The WTI is supported at 98,00 dollars today, its first resistance is seen at 103,35 dollars. The Brent's first resistance is seen at 112,00 dollars, its first support is at 107,50 dollars.
As desicive fundamental news and important economic indicators were lacking this morning, oil futures were mainly influenced by foreign exchange. While oil futures showed little movement in the early morning as investors remained cautious, they have gained considerable ground around midday given the advancing dollar and a technical correction up. Only NYMEX C. Oil has marked but small gains. Its climb over 100 dollar the previous day has proved short-lived and probably only reflected the deal concerning a pipeline at the central storage place in Cushing. Moreover, the WTI Crude front month's volume is rather low, as the contract will expire this evening. In the past few minutes, oil prices have edged slightly lower as the euro has briefly retreated.
ICE Gasoil contract for December delivery settled at 973,00 dollars on Thursday. This was 21,25 dollars below Wednesday's settlement. With some 95.300 contracts the traded volume was well above average.
The UN security council was made available a text of a new resolution formally condemning Iran for its nuclear work signed by the U.S., Russia, China and other global powers. The United Nations' top nuclear official urged Iran to allow a visit by a high-level delegation from the IAEA to discuss growing evidence that Tehran has been developing the technologies to build atomic weapons.
After reports on the ConocoPhillips deal regarding the Seaway Pipeline in the USA had made the price of one barrel of WTI Crude surge on Wednesday, there has already been some profit taking. Meanwhile the spread between the WTI Crude and the Brent - temporarily sinking below 8 dollars - has climbed to 9.60 dollars again. This is still well below Tuesdays level, when the spread amounted to 15 dollars. As the plans regarding the Pipeline will only be effectuated by autumn 2012, it might take take some time until the spread will consolidate between 5 and 8 dollars. The planned temporary shutdown of an Antwerp Exxon refinery particularly weighed on the Brent's January contract yesterday. In Spain, Repsol already shutdown a refinery due to a strike. According to market players, the shutdowns might lead to a slight decrease of demand, reducing the time-spread between the Brent's front month and its following months.
The Euro zone's debt crisis remains a decisive factor for analyists assessing the global economy and the oil demand linked to it. Bond yields having sharply risen recently not only for Spanish and Italian but also for French bonds weigh on investors' sentiment. Thus, market participants avoid riskier assets as stocks and commodities. In current assessments of the market situation, the euro crisis is a decisive bearish factor. Analysts of the Swedish bank SEB presume that in the forth quarter of 2011 the average price for Brent crude will be about 115 dollars. For 2012 they expect an average price of about 114 dollars. However, the analysts emphasized that - in case of an escalation regarding the Iran - the price might surge. As the reserves of the countries producing oil decreased significantly in 2011, the Brent might even rise above 200 dollars per barrel then.
The euro edged higher this morning as traders covered short positions after its recent drop to a five-week low, but the shared currency was expected to remain in a downtrend amid worries the euro zone debt crisis is spreading. Selling pressure on the euro has intensified this week on signs that contagion was starting to affect core euro zone countries such as France. The focus was on Spain on Thursday, which had to pay the highest rate to sell its 10-year debt since 1997, just slightly below 7 percent mark seen as unsustainable. The euro, however, showed some resilience in the wake of the Spanish bond auction, getting a boost from short-covering and holding above a five-week trough of 1.3421 dollar hit on Thursday. Such short-covering interest is likely to persist and limit the speed of the euro's declines, an analyst said. In the last few minutes, the common currency has already erased some of its earlier gains, however. The euro last sold at 1,3494 dollars, after 1,3455 last night. The single currency has support at 1,3405 dollars, 1,3375 dollars, 1,3345 dollars and 1,33 dollars. Resistances are at 1,3505 dollars, 1,3525 dollars, 1,36 dollars and 1,3670 dollars.
U.S.
Nymex Access gaining: Oil futures are edging modestly higher in Asian trading hours and on Globex electronic trading platform this morning in a technical reaction to Thursday's hefty losses and with some support of Asian equities that recovered near the end of the session after having collapsed at the opening. The traded volume is slightly above average. NYMEX crude oil for december delivery expires today at 8.30 p.m. In order to avoid getting caught in unpredictable end-of-month liquidations, market participants' focus is already on the new front month January that is consequently more actively traded. The thin volume of the December contract makes the future volatile and susceptible to price fluctuations.
Houston (ex-wharf indications 18-11)
380cst $650
180cst $700
MGO $1005
Very tight avails for 180 cst
New Orleans (ex-wharf indications 18-11)
380cst $653
180cst $703
MGO $1010
Singapore (correct as of 1430hrs LT - delivered indications)
Crude's is losing sharply with WTI -$3.74. Singapore paper is following with -$17.40 for 180cst and -$16.25 for 380cst for Dec, and for Jan 180 cst -$17.40 and 380cst -$16.25 with MGO Dec contracts at -$1.69 and for Jan at -$1.68. The cargo market is following paper now with 180cst -$17.40, 380cst -$16.20 and MGO -$1.68.
As a result Med / North differential has widened to more than 11$/mt. Singapore fuel oil markets lost more than 10.0$/mt during the Platts window yesterday tracking the crude movement. Singapore heavy residual oil inventories increased by 0.55 mbbl to 17.73 mbbl. Market fundamentals remain firm. The delivered bunker premium was around 17.0$/mt above the cargo prices yesterday. Bunker fuel swaps were strongly down yesterday following crude both in Rotterdam and Singapore.
High premiums for prompt deliveries.
380 cst $675
180 cst $683
MGO $980
Fujairah (delivered indications 18-11)
380cst $685
180cst $700
MGO $1035
Avails issue are sustaining the market.
ARA (Amsterdam - Rotterdam - Antwerp)
The Northwest Europe bunker market saw improved liquidity Thursday, despite a $2/barrel day-on-day drop in Brent crude as ongoing shortages of high sulfur fuel oil in Amsterdam-Rotterdam-Antwerp continued to trigger prompt demand. Product availability in ARA worsened due to tighter blending stock availability and increased inland demand for fuel oil and middle distillates in Belgium, which prompted some tightness at ExxonMobil’s 307,500 b/d refinery and Total’s 350,071 b/d refinery, sources said. Problems with loading have spread to Antwerp, there is huge congestion at most of the Antwerp and Flushing refineries. Moreover, ExxonMobil will start gradually halting its output at its refinery in Antwerp this Friday in order to “ensure a full standstill on November 23” due to an announced strike about a labor agreement for 2011-2012. Suppliers in Rotterdam continued to report congestion at loading installations due to very tight availability for both HSFO and low sulfur fuel oil. 648-652 were levels traded in the MOC with 671 done on LS with Litasco selling aggressively 54KT.
Rotterdam
Indications for delivered bunkers:
380cst : $ 636
(1.0 %) :$ 664
180cst: $ 652
(1.0 %):$ 692
MGO 0.1%S: $990
