After yesterday's price rally oil futures have stayed on a high level during morning trade. There was some profit taking but given the recent positive economic indicators and the still bullish technical situation losses have been limited. Against the backdrop of the shut-down of European refineries, the time-spreads regarding oil products have risen and the backwardation structure has aggravated. The time spread reflects the spread between the prices of contracts with a nearer delivery date and those with a later delivery date. Around New Year, many stock keepers and refineries reduced their stocks for tax reasons. European demand is currently rather weak, but low stocks and looming supply shortages usually spurs prices, especially those of contracts with a sooner delivery date, market players say. Moreover, the European market is more strongly depending on oil imports from the Arab countries than the USA. That is why the risk premium regarding the Iranproblems has pushed the spread between the WTI crude and the Brent to more than 9 dollars per barrel. Currently oil prices are pulling back from their intraday highs on a weakening euro.
Oil futures rallied at the beginning of the year, marking highs until late at night. The slightly bullish technical and fundamental constellation already indicated a steady tendency Tuesday morning. As oil futures at ICE and NYMEX breached several resistance lines on the day and the stochastic indicator at the WTI charts provided for additional buying momentum, numerous technical buying orders were triggered. In addition to the technical constellation the risk premium rose against the backdrop of the tensions between the Iran and the USA. At the weekend, US President Obama had signed new decisive sanctions against the Iran. Other supportive factors were better-than-expected PMIs in Chinaand the USA, the shut-down of refineries in Europe, looming strikes in Nigeriaand a strong oil demand from Asia. All these bullish factors, along with technical buying impulsions, made oil futures settle on a higher level last night.
ICE Gasoil contract for January delivery settled at 953.50 dollars on Tuesday. This was +29.50 dollars above Friday's settlement. With some 51,400 contracts the traded volume was slightly below average.
After the buying signals it gave yesterday morning and afternoon, the stochastic indicator is still bullish for ICE and NYMEX charts this morning. As oil futures breached mid-term resistances yesterday, technical analysts assess today's situation as bullish. Given yesterday's price rally the most part of the buying impulsion has already been consumed but from the technical point of view there are no signs of a significant counter-reaction, they say. During morning trade there might be some profit taking. However the WTI crude is more likely to test its resistance lines at 103.20 dollars and at 103.40 dollars on the day. The WTI Crude's first support is seen at 102.00 dollars today, its first resistance at 103.20 dollars. The Brent's first support is seen at 110.35 dollars, its first resistance at 112.45 dollars.
U.S.
Nymex acces easing. Oil futures retreat in East Asia and on Globex electronic trading platform this morning. They trade slightly lower in London and New Yorkin the early morning. According to market players there is some profit taking after yesterday's price rally. The traded volume is slightly below average. Market participants look ahead to the developments at European markets, to impulsions provided by foreign exchange and today's economic data from Germany and the USA and to the API's data, to be published at 10.30 p.m.tonight.
Houston (ex-wharf indications 3-1)
380cst $651
180cst $687
MGO $978
Very tight avails for 180 cst
New Orleans (ex-wharf indications 3-1)
380cst $653
180cst $690
MGO $981
Singapore (correct as of 1430hrs LT - delivered indications)
Crude is surging with WTI +$2.49. Singapore paper is gaining as well with +$24.30 for 180cst and +$22.85 for 380cst for Jan, and for Feb 180 cst +$23.55 and 380cst +$22.00 with MGO Jan contracts at +$2.95 and for Feb +$2.96. The cargo market is in line with crude and paper, gaining with 180cst +$10.00, 380cst +$7.37 and MGO +$1.71.
The Singapore fuel oil markets started the year with strong buying interest reflecting the current tightness in the market. Market was up more than $7.5 during the Platts window yesterday. The delivered bunker premiums strengthened to around $25.5 above cargo prices. This morning markets continue to trade higher.
High premiums for prompt deliveries.
380 cst $704
180 cst $719
MGO $945
Fujairah (delivered indications 4-1)
380cst $725
180cst $750
MGO $1055
ARA (Amsterdam - Rotterdam - Antwerp)
Yesterday, Rotterdam's local delays caused by weather added to the bullish mood coming from rallies in the ICE Brent crude futures market, while a firm Singapore market also impacted Northwest European sentiment. The 380 CST high sulfur assessment rose to $662.50/mt, from the last assessment of $621.50/mt. While logistics led to a firm prompt market, fuel oil traders also noted that they expected arbitrage flows from Rotterdam to Singapore to increase, further tightening the prompt Rotterdam complex, leaving much of the Northwest European market described as supported at the beginning of the year.
Rotterdam
Indications for delivered bunkers:
380cst : $ 665
(1.0 %) :$ 705
180cst: $ 690
(1.0 %):$ 729
MGO 0.1%S: $960
