---

After having consolidated in the morning, oil futures have lost considerable ground around noon in the wake of forex trade and stock exchanges. The Brent and then WTI crude have fallen below their first supports. As expected, the difficulties of resolving the euro zone's debt crisis continually weighs on the common currency and equities. Unlike on Tuesday, product futures have also declined today, except the NYMEX gasoline contracts which have been supported by a higher USdemand. There is hardly any supportive news regarding the other futures, as the problems regarding the Iranhave already been considered in the pricing. Neither has Petroplus's insolvency shown any considerable impact yet, given the overcapacities that exist in the European refinery sector. As for the DOE's data, investors expect bearish figures as well, so an upward movement of oil prices is rather unlikely ahead of the publishing of oil inventories data in the afternoon.

ICE Gasoil contract for February delivery settled at 941.75 dollars on Tuesday. This was 4.75 dollars above Monday's settlement. With some 50,600 contracts the traded volume was little above average.

Product prices rose in London and New Yorkin electronic morning trading, hitting resistance lines repeatedly without being able to breach through. Crude futures declined as market players took profit, enlarging the "Crack Spread" (price difference between crude oil and product futures), which is explained by the little impact of the Iranian oil embargo on the supply situation, the ailing oil demand and the pending insolvency of Suiss-based Petroplus which supports oil product prices. The rise in US gasoline futures later in the session is the result of a MasterCard Spending Pulse report saying that US gasoline demand increased last week. Overall market sentiment remained mixed also in late trading and while WTI and Brent settled lower, oil products (gasoil, heating oil and gasoline futures) remained poised on their high level.

Both Stochastic and RSI indicator are still in the neutral area this morning, giving no clear signals. Only the Stochastic oscillator at the ICE gasoil Chart is slightly bullish. Still, in order to trigger a buying signal the two lines of the Brent and the WTI crude must converge as well. Short-term trendchannels are still intact with more upside to prices.

U.S.

Nymex acces gaining. Oil futures are little changed vs last night in Asian trading hours and on Globex electronic trading platform this morning, as the strong build in US crude oil inventories countered an increase in USgasoline demand last week. The traded volume is slightly below average. Market players will eye some economic indicators and the release of the DOE data today.

API's: Crude oil +7.3; distillates -2.5; gasoline -0.6 million barrels vs previous week. Refinery utilization -1.2%
DOE's; due out tonight
Forecasts: Crude oil +2.2; distillates -0.2; gasoline +1.7 million barrels vs previous week

Houston (ex-wharf indications 24-1)

380cst $667
180cst $703
MGO $998
Very tight avails for 180 cst

New Orleans (ex-wharf indications 24-1)

380cst $669
180cst $706
MGO $1002

Singapore (correct as of 14:30 hrs LT - delivered indications)

Crude is dropping like a stone, losing with WTI -$1.93. Singapore paper is bearish as well with -$4.85 for 180cst and -$4.50 for 380cst for Feb, and for Mar 180 cst -$5.00 and 380cst -$5.00 with MGO Feb contracts at -$1.09 and for Mar -$1.10. The cargo market is not yet reacting, gaining with 180cst +$1.33, 380cst +$5.25 and MGO +$0.23.

Singapore fuel oil markets reopened today after long weekend. Bunker fuel oil swaps yesterday posted slight gains along the curve both for Rotterdam and Singapore papers. East/West spread remains broad, trading around $54.00 for February, while viscosity spread between 180cst and 380cst papers is still trading above $13/mt for February. Both markets are trading higher this morning.

High premiums for prompt deliveries.

380 cst $740
180 cst $755
MGO $970

Fujairah (delivered indications 25-1)

380cst $720
180cst $750
MGO $1050

Avails issue are sustaining the market.

ARA (Amsterdam - Rotterdam - Antwerp)

Despite stronger sentiment on the oil and capital markets on improved financial considerations Monday, trading activity across the Northwest European bunker hubs remained weak. Rotterdam bunker prices edged higher on firmer 3.5% barges, that firmed following stronger crude and ongoing high sulfur fuel oil shortages for prompt supplies. The market is supported by new fixtures for Singapore, with Koch, Eni and Litasco fixing some Suezmax on subjects, as well as there being a VLCC still to load.

Rotterdam

Indications for delivered bunkers:

380cst : $ 665
(1.0 %) :$ 676
180cst: $ 678
(1.0 %):$ 722
MGO 0.1%S: $943