---

Oil prices rose in the morning in the wake of a positive start of European equity markets that shook off warnings of rating agencies on European credit ratings. Technical buying orders that were triggered after support lines proved strong and an oversold market situation added to the upward momentum. Still, analysts warn that market participants could take advantage of higher prices and take profit as market sentiment was still morose.

Oil futures started the day with a weaker tone in the morning on profit taking after Friday's late gains. When US rating agency Moody's warned that last week's EU summit did not go far enough in easing immediate concerns about the region's debt markets and forecast possible downgrades of credit ratings of euro zone countries in 2012, pressure on the euro and heightened risk aversion increased the greenback's safe-haven appeal and helped lift the dollar, making oil more expensive for traders outside the US. Even though support lines at 107.10 dollars for the brent and 97.50 dollars for the WTI crude proved strong, oil futures settled near their intraday lows.

When ministers from the Organization of Petroleum Exporting Countries meet Wednesday they are expected to find an agreement on their official output quota. While Irancalled on some fellow OPEC members to reduce their output, a group around Saudi Arabia is in favour of keeping quotas unchanged. At their last meeting, in June, members of the producers' group failed to reach a deal. After the talks collapsed, a Saudi-led group of Gulf countries boosted production well beyond their OPEC quotas, saying the move was meant to make up for lost Libyan crude. Yet the group faces a tricky backdrop in the oil market. A recovery in Libyan oil and an uncertain economic outlook could strengthen calls to keep output from rising. Another variable is rising international pressure on Tehran that could result in a European embargo on purchases of Iranian oil. Observers believe the group will opt for a communique that keeps the ceiling unchanged. OPEC is currently pumping about 30 million barrels a day, including Iraq, which isn't bound by OPEC's quota system. That is well above its official ceiling of 24.845 million barrels a day.

ICE Gasoil contract for January delivery settled at 923.00 dollars on Monday. This was 2.00 dollars below Friday's settlement. With some 88,000 contracts the traded volume was above average. The contract for December delivery expired Monday at 925.75 dollars.

The Stochastic oscillator is still bearish at NYMEX and ICE charts this morning, yet at the oversold level, paving the way for un upward correction. But only if the two lines of the indicator cross, a buying signal will be triggered. The short-term downtrends are still intact but only below 107.00 dollars for the brent and 97.35 dollars for the WTI crude will there be more technical selling. If these supports prove strong, an upward correction is likely, so technical analysts. The first support for the WTI is at 97.50 dollars today, its first resistance is seen at 98.35 dollars. The Brent's first resistance is seen at 107.95 dollars, its first support is at 107.00 dollars.

U.S.

Nymex acces losing. Oil futures consolidate on their low level in Asiaand on Globex electronic trading platform this morning, the WTI crude lingering short below 98.00 dollars for a barrel. The traded volume is clearly below average. There are no key indicators on the agenda today, so oil is seen in correlation with the dollar and equity markets also today.

Survey of US Petroleum inventories due out tonight at 22:30(API) and Wednesday at 16:30(DOE)
Crude oil -2.2; distillates +1.4; gasoline +0.8 million barrels vs previous week

Houston (ex-wharf indications 12-12)

380cst $620
180cst $658
MGO $939

Very tight avails for 180 cst

New Orleans (ex-wharf indications 12-12)

380cst $623
180cst $661
MGO $942

Singapore (correct as of 1430hrs LT - delivered indications)

Crude is easing only slightly, losing with WTI -$0.75. Singapore paper is not yet fully reacting to the latest turn, gaining marginally with +$0.25 for 180cst and +$0.95 for 380cst for Dec, and for Jan 180 cst +$0.20 and 380cst +$1.00 with MGO Dec contracts at +$0.10 and for Jan +$0.20. The cargo market is easing, but losing still with 180cst -$0.17, 380cst -$0.05 and MGO -$1.10.

The Singapore fuel oil markets did not have much movement closing flattish during the Platts window yesterday. The fundamentals are improving as more on specification supplies are in the market. The delivered bunker premiums strengthened to above $20.00 above the cargo prices yesterday. This morning both markets are trading slightly higher.

High premiums for prompt deliveries.

380 cst $650
180 cst $675
MGO $935

ARA (Amsterdam - Rotterdam - Antwerp)

Bearish sentiment prevailed in the Northwest European bunker market Monday as some investors on the oil and equity markets remained cautious about the eurozone debt crisis. Trading at remained subdued. High sulfur fuel oil supplies in ARAremained tight as one VLCC was expected to get loaded in Rotterdamthis week Low sulfur fuel oil cargoes have been supported by good utility demand in the Mediterranean and lower refinery output across Europe.

Rotterdam

Indications for delivered bunkers:

380cst : $ 612
(1.0 %) :$ 658
180cst: $ 629
(1.0 %):$ 676
MGO 0.1%S: $926