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The continuing Iranian tensions and frim Chinese economic data are underpinning the crude prices this morning. China's official Purchasing Managers' Index showed the manufacturing sector expanded in January, with the index slightly up to 50.5 from 50.3 in December, above a 49.5 reading forecast.

Yesterday, Europe signed up to the fiscal compact and the ESM treaty market sentiment was lifted, accelerating oil's rise in electronic morning trading that got support from a stronger euro and the known bullish fundamentals (Iran, Sudan, Petroplus refinery). When first resistance lines were breached, technically driven buying orders lent additional support, helping oil prices to new intraday highs. NYMEX gasoline was temporarily buoyed by a pending U.S. oil worker’s strike. When a couple of important U.S. indicators disappointed the markets participants a rising risk aversion tempted traders to sell the euro and equities and to buy the safe-haven dollar instead. The strongly rising usd tempted investors to take profit on oil futures and consequently prices retreated from their intraday highs to settle lower in the end.

ICE Gasoil contract for February delivery settled at 949.25 dollars on Tuesday. This was 3.50 dollar below Monday's settlement. With some 37,100 contracts the traded volume was significantly below average.

OPEC: The IMF expects Libya's oil output to amount to 1.35 mbpd in 2012, after the country's production was completely brought to its knees last year against the backdrop of the civil war. Libya's oil industry is quickly recovering and the increasing revenues through oil exports may provide a high potential of economic growth. Last year the Libyan economy weakened by 60%. According to IMF forecasts, the country's economy may rise by 70% this year, and by another 20% in 2013. Oil production may increase to 1.76 mbpd by 2014 which would be the pre-war level. The IMF sees an export share of 70%.

The Stochastic oscillator at the ICE and NYMEX charts is giving selling signals, see also technical analysis. Oil prices linger just above their short-term supports in morning trading. Should these be breached, automatically triggered selling orders would weigh on the oil complex. Even though these support lines proved strong on Tuesday technical analysts are bearish this morning.

U.S.

Nymex acces gaining. Crude oil futures are consolidating in Asian trading hours and on Globex electronic trading platform this morning, while product prices were temporarily supported but are retreating. The traded volume is about on average. A string of important economic indicators. The DOE data might give some more bearish signals in the afternoon.

API's: Crude oil +2.1; distillates +1.0; gasoline -0.2 million barrels vs previous week. Refinery utilization -0.0%
DOE's; due out tonight
Forecasts: Crude oil +3.2; distillates -1.6; gasoline -0.2 million barrels vs previous week

Houston (ex-wharf indications 31-1)

380cst $676
180cst $712
MGO $1027

Very tight avails for 180 cst

New Orleans (ex-wharf indications 31-1)

380cst $678
180cst $714
MGO $1029

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

Crude is back losing with WTI -$0.83. Singapore paper is reflecting this turn with -$2.00 for 180cst and -$2.00 for 380cst for Feb, and for Mar 180 cst -$1.45 and 380cst -$1.65 with MGO Feb contracts at -$0.07 and for Mar -$0.10. The cargo market is gaining only slightly with 180cst +$0.56, 380cst +$1.88 and MGO +$0.31.

The Singapore fuel oil markets were up ranging from +$0.5 to $2.0 during the morning yesterday. The market fundamentals remain well supported by robust demand from the Singapore bunker sector as well as regionally especially the Chinese markets. The delivered bunker premiums were seen around $25.75 above cargo prices. This morning markets are trading higher.

High premiums for prompt deliveries.

380 cst $725
180 cst $735
MGO $950

Fujairah (delivered indications 1-2)

380cst $730
180cst $755
MGO $1050

ARA (Amsterdam - Rotterdam - Antwerp)

The Rotterdam bunker fuel market softened again Tuesday, with 380 CST high sulfur delivered barges assessed at $670.50/mt, down $6.00/mt from Monday. High Chinese refinery demand is supporting the arbitrage to Singapore.

Rotterdam

Indications for delivered bunkers:

380cst : $ 671
(1.0 %) :$ 684
180cst: $ 686
(1.0 %):$ 705
MGO 0.1%S: $950