During morning trade, oil futures have initially kept track of their steady tendency on a still bullish technical constellation, reports regarding the EU's oil embargo against the Iranand on looming strikes in Nigeriaand France. After the Brent's first resistance has been breached, resistance lines at 114.60 dollars for the Brent, at 975.00 dollars for the G.Oil and at 103.75 dollars for the WTI crude have remained strong. Then some technical profit taking, a strong dollar and falling equities have caused a downward reaction. Investors are focussing again on the debt crisis in Europe, where the result of an auction of French bonds has been expected that might influence the rating of the country's note.
Wednesday morning oil futures' upward potential was still restricted after Tuesday's price rally, with market players taking some profit. After its weak start at the beginning of this year, the dollar gained some strength and also weighed on prices. The bullish technical and fundamental situation limited downward leeway, however, rendering possible a sharp upward correction in the afternoon. In France negotiations between Petroplus and the government were cancelled, in Nigeria labour unions announced strikes throughout the country and in Brussels diplomats said that they agreed on the planned sanctions against the Iran but the details were still to be discussed. In a reaction to this series of bullish news, oil futures breached their resistance lines. This triggered further technical buying orders. Even though investors took some profit shortly afterwards, oil futures' steady tendency remained until late in the evening. The WTI crude thus even climbed to an 8-month high at 103.74 dollars.
EU diplomats announced yesterday, that they had generally agreed on an oil embargo against the Iran, though details as to the time of implementation had yet to be discussed. A spokesman of the Greek government confirmed that they would not oppose to an embargo. In December, Greece had not agreed on an embargo, worrying about its economic consequences for the debt-shaken country. Further sanctions against the Iranian central bank or a more general embargo against other economic sectors were also an option, the diplomats added. However, an agreement on these issues is unlikely before the reunion of the EU's ministers of foreign affaires on Jan 30th.
ICE Gasoil contract for January delivery settled at 964.75 dollars on Wednesday. This was +11.25 dollars above Tuesday's settlement. With some 70,900 contracts the traded volume was on average.
The stochastic indicator is still bullish for ICE and NYMEX charts this morning, bolstering the price level throughout the market. After oil prices had breached further resistance lines yesterday, buying pressure had once more increased. Although the stochastic is still bullish, the first buying impulsions provided by the indicator already existed two days ago. The sharp correction up in the last few days may lead to profit taking, particularly as the strengthened dollar slightly weighs on prices, analysts say. From a merely technical point of view the situation on the market remains bullish, they add. Oil futures might thus test their first and second resistance lines. The WTI Crude's first support is seen at 101.85 dollars today, its first resistance at 103.75 dollars. The Brent's first support is seen at 113.00 dollars, its first resistance at 114.00 dollars.
U.S.
Nymex acces gaining. Oil futures remain on a high level in East Asia and on Globex electronic trading platform this morning after some profit taking. The traded volume is slightly below average. Market participants look ahead to the developments at European markets, to impulsions provided by foreign exchange, today's economic data and to the DOE's data, to be published at 5.00 p.m. this evening.
API's: Crude oil -4.4; distillates +5.2; gasoline +3.4 million barrels vs previous week. Refinery utilization +0.4%
DOE's; due out tonight
Forecasts: Crude oil -1.4; distillates +0.5; gasoline +1.0 million barrels vs previous week
Houston (ex-wharf indications 4-1)
380cst $663
180cst $698
MGO $993
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 slowing, but gaining still with WTI +$0.11. Singapore paper is tracking crude with +$6.65 for 180cst and +$6.70 for 380cst for Jan, and for Feb 180 cst +$7.45 and 380cst +$7.30 with MGO Jan contracts at +$2.24 and for Feb +$2.25. The cargo market is reflecting Yesterday's bullishness with 180cst +$24.13, 380cst +$20.43 and MGO +$2.89.
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)
Bunker fuel values across Northwest Europe rose again Wednesday, with the fuel oil complex across the region bolstered by a firm underlying ICE Brent crude market. ICE Brent rallied on ongoing concerns over the EU/Iranian crude import relationship. Rotterdam high sulphur fuel oil barges were assessed at a premium of $21.25/mt to their comparable front-month swaps Wednesday, an unprecedented level on the back of a strong Singapore market and the anticipation of arbitrage flows from Rotterdam to the Asian hub. While a few vessels are slated to load January and two more load February, market participants expected a flurry of fixtures and to see the Rotterdam market tighten further.
Rotterdam
Indications for delivered bunkers:
380cst : $ 670
(1.0 %) :$ 712
180cst: $ 696
(1.0 %):$ 737
MGO 0.1%S: $965
