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Oil futures are bullish during early morning trade, with ICE contracts breaching their first resistance lines. The Brent has even tested its second resistance at 123.75 dollars . Momentum has been provided by the advancing euro and European equities, which had already climbed at the opening of the session and extended their gains after the publication of a better-than-forecast German IFO bussiness climate index.

Oil futures were little changed near 9-month highs in European morning trading, as traders cautiously eyed signs of a slowdown in manufacturing in Europe and China. Later in the day first support lines were hit at 1,012.00 dollars gasoil, 121.00 dollars brent and 105.70 dollars WTI as worries over the euro-zone sovereign debt crisis and profit-taking outweighed supply disruption concerns. When the supports proved strong, oil prices rebounded. While the dollar traded in a narrow range vs the euro during the day and lacked momentum the two-day visit of IAEA inspectors to Iran failed to lift Western nation's suspicions and supported the oil complex. Futures at the ICE breached first short-term resistance lines following their uptrend. As the WTI received less support, the spread between the two benchmark crudes widened to over 16 dollars.

ICE Gasoil contract for March delivery settled at 1,023.75 dollars on Wednesday. This was 10.00 dollars above Tuesday's settlement. With some 60,500 contracts the traded volume was above average.

Iran's nuclear work will go on, supreme leader Ayatollah Ali Khamenei said Wednesday, adding that his country had never been seeking an atomic weapon and that the nuclear program was for civilian use only. Short before, IAEA inspectors had left Tehran after negotiations had reached an impasse following a high-stakes, two-day visit to the Islamic republic and talks that failed to lift their suspicions of atomic weapons research. More and more, the market is now pricing in the real possibility that war in the region is inevitable. At any rate, the stakes continue to be raised. According to the National Iranian Oil Co. Iran will restart exporting its oil to French and U.K. companies if they sign long-term supply deals (2 to 5 years), but they wouldn't be allowed to send the oil to refineries in their countries. But experts reckon that both countries will refrain from signing long-term oil contracts as they contravene EU sanctions once they come into force. And British Shell and French Total had already stopped
While the Stochastic oscillator at the WTI chart is modestly bearish this morning, the one at the ICE is slightly bullish yet both are at the overbought level, as is the RSI. As uptrends are considered as strong, however, a downward correction would only be triggered once the lower limits of the trendlines were breached. So technical analysts are rather neutral today and forecast a consolidation. After the March contract at the NYMEX has expired, the spread between the brent and the WTI front months is expected to widen again.

U.S.

Nymex acces gaining. Oil futures trade in a narrow lateral range in Asian trading hours and on Globex electronic trading platform this morning except for the WTI crude that is supported by a falling dollar. The API's inventory data give no momentum. The traded volume is slightly below average. Market participants will eye forex markets and the release of the DOE data today, as well as a string of economic indicators.

API's: Crude oil +3.6; distillates +0.6; gasoline +0.3 million barrels vs previous week. Refinery utilization +2.9%
DOE's; due out tonight
Forecasts: Crude oil +0.3; distillates -0.8; gasoline +0.3 million barrels vs previous week

Houston (ex-wharf indications 22-2)

380cst $722
180cst $763
MGO $1063

Very tight avails for 180 cst

New Orleans (ex-wharf indications 22-2)

380cst $724
180cst $766
MGO $1066

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

Crude is cooling slightly with WTI -$0.04 Singapore paper is reflecting the deceleration, gaining still with +$4.00 for 180cst and +$4.25 for 380cst for Mar, and for Apr 180 cst +$3.90 and 380cst +$4.25 with MGO contracts Mar +$0.70 and Apr +$0.69. The cargo market is starting to react to this week's bullishness with 180cst +$12.81, 380cst +$11.27 and MGO +$0.96.

The Singapore fuel oil markets rebounded more than $11.0 during the morning yesterday. The delivered bunker premiums fell to only around $7.0 above cargo prices yesterday as the strong surge in outright prices dampened demand. Bunker fuel oil swaps gained app. $9-8/mt in the front and only $3-4/mt at the backend of the forward curve. Markets are trading slightly higher this morning.

High premiums for prompt deliveries.

380 cst $730
180 cst $740
MGO $1010

ARA (Amsterdam - Rotterdam - Antwerp)

Although bunker values in the ARA edged higher Tuesday following higher outright 3.5% barge prices in Rotterdam, trading remained subdued as buyers were anticipating lower offer levels due to a closed arbitrage to the East. Antwerp is still experiencing some low sulfur fuel oil tightness due to shortages at local refineries.