Oil prices have consolidated in the course of the morning, trading sideways in a narrow range. As decisive fundamental news have been lacking, market participants have remained cautious ahead of the DOE's data and US economic indicators, to be published in the afternoon. The recent geopolitical risks have long been taken into consideration for the pricing and the global oil demand has not really improved.
Yesterday, Oil prices rose in electronic morning trading and were poised at their high level until the opening of NYMEX session except for a short decline when a strong dollar and weak European equities weighed on the oil complex. The WTI breached its first resistance line during the session in New York but when the 102.00 dollar resistance proved strong later on, profit taking set in and the bearish IEA report along with the expected build in USoil stockpiles added to the bearish sentiment. ICE futures lost considerably more ground than did the crude oil in New York, slashing the spread between the brent and the WTI crude to below 10 dollars, a sign for a reduced risk premium, so analysts. A strong euro/weaker dollar and the positive note of US equities limited oil's slide, still futures pared only some of their losses in after-hour trading.
ICE Gasoil contract for February delivery settled at 943.25 dollars on Wednesday. This was 9.25 dollars below Tuesday's settlement. With some 91,400 contracts the traded volume was well above average.
EU diplomats seem to approach a solution regarding the planned oil embargo against the Iran. Some diplomats say that politicians will probably agree on July 1 as date of initiation for the embargo. Thus, countries that are importing Iranian oil would have 5 months to find alternative suppliers. A further delay of the embargo might be possible, though, as the EU is to examine the economic effects of the embargo in two or three months.
The Stochastic oscillator at the ICE charts is neutral at the oversold level while the one for the WTI crude and the gasoline contract is seen slightly bullish. So technical analysts take a rather neutral standpoint today. Markets are very volatile for the time being and therefore difficult to read. While the short-term tendencies for the G.Oil in London and the H. Oil in New York point downwards, the brent is consolidating and WTI and gasoline at the NYMEX are in a short-term uptrend. This shows that there is a high amount of speculative money in the markets and a risk premium on oil futures that is constantly changing depending on the news that hit the markets.
U.S.
Nymex acces gaining. Oil futures are little changed in Asian trading hours and on Globex electronic trading platform this morning, only the brent is trading somewhat higher after Wednesday's losses. NYMEX crude gets some support from last night's APIdata. The traded volume is clearly above average. Market participants will eye a string of important US indicators and the release of the DOE's oil inventory data in the afternoon.
API's: Crude oil -4.8; distillates -0.9; gasoline +4.3 million barrels vs previous week. Refinery utilization -1.7%
DOE's; due out tonight (one day delayed due to Martin Luther Kingday on Monday)
Forecasts: Crude oil +2.9; distillates +2.2; gasoline +2.9 million barrels vs previous week
Houston (ex-wharf indications 18-1)
380cst $678
180cst $713
MGO $994
Very tight avails for 180 cst
New Orleans (ex-wharf indications 18-1)
380cst $681
180cst $716
MGO $997
Singapore (correct as of 1430hrs LT - delivered indications)
Crude is slightly more bullish with WTI +$0.64. Singapore paper is ignoring the bullishness and is turning bearish with -$3.25 for 180cst and -$3.45 for 380cst for Feb, and for Mar 180 cst -$3.30 and 380cst -$3.45 with MGO Feb contracts -$0.90 and for Mar -$0.80. The cargo market is reacting to the bullish sentiment with 180cst +$3.66, 380cst +$2.27 and MGO +$2.05.
The Singapore fuel oil markets on the other hand were up more than +$2.25 during the morning. The strong buying interest in Fuel Oil swaps narrowed the cracks sharply. The delivered bunker premiums were around $25.0 above cargo prices. Bunker fuel swaps posted a few dollar losses along the curve both for Rotterdam and Singapore papers. Prices were slightly stronger at the backend flattening the curve a little however the forward curve maintains a very attractive backwardation. This morning both markets are trading higher.
High premiums for prompt deliveries.
380 cst $720
180 cst $735
MGO $945
Fujairah (delivered indications 19-1)
380cst $729
180cst $753
MGO $1045
ARA (Amsterdam - Rotterdam - Antwerp)
Despite a softer 3.5% FOB Rotterdam barge assessment, Northwest European bunker values continued to firm Tuesday on ongoing high sulfur fuel oil shortages prompted by ongoing VLCC loading in Rotterdam. The premium of delivered Rotterdam 380 CST low sulfur to high sulfur bunker fuel was assessed at $10/mt Tuesday, down from $14.50/mt Monday, an 11-month low due to a tight HSFO supplies and weaker sentiment on low sulfur fuel oil. The $10/mt 380 CST LSFO premium over HSFO was last seen February 8, 2011. HSFO was supported by strong demand from the Asian market and the anticipation of more arbitrage flows from Rotterdam to Singapore next month.
Rotterdam
Indications for delivered bunkers:
380cst : $ 672
(1.0 %) :$ 682
180cst: $ 686
(1.0 %):$ 729
MGO 0.1%S: $955
