Oil prices have declined during morning trade, as investors have taken some profits and the dollar advanced. First supports have been breached. Weaker equities have additionally weighed on oil futures. Sanctions against Iran over its nuclear program have cut off a major source of oil for many refiners and investors worry escalating confrontation in the Middle East could disrupt oil flows from other suppliers in the Gulf, with supplies from several smaller producers, including South Sudan, Yemen and Syria, have also been cut off in recent months, tightening supplies to some markets. But oil supplies from some other producers such as Saudi Arabia and Nigeria are improving and there has also been talk of a release of U.S. strategic stocks if oil prices continue to rise.
Given the strongly overbought market situation and the lack of bullish impetus, investors at ICE and NYMEX took some profit during Friday morning trade. The price rally which has been going on for days has made a downward correction overdue, analysts say. As many investors feared an escalation of the conflict regarding the Iran's nuclear program, they avoided short positions, however, and therefore oil price's supports limited profit taking. The technically strong euro also supported oil futures. After another report of the IAEA, indicating that the expansion of Iranian installations for the enrichment of uranium advanced rather quickly in the past four months, oil prices sharply rose in the evening. Only near the resistance lines at 125.60 dollars (Brent) and at 110.00 dollars (WTI) buys ebbed. Thus the WTI Crude climbed for the ninth consecutive trading day, reaching a new 9-month high, as did futures at ICE.
ICE Gasoil contract for March delivery settled at at 1,030.75 dollars on Friday. This was 0.75 dollars below Thursday's settlement. With some 52,400 contracts the traded volume was about on average.
Iran: The IAEA inspectors' final report on the latest visits to the Iran indicates a rapid expansion of installations for the enrichment of uranium within the past four months. Tehran has significantly raised the number of new technically, and more advanced centrifuges, which are used for the enrichment of uranium. The stocks of uranium which is enriched by 20% are to have increased to 110 kg. Experts say that about 125 to 200 kg of such material is needed to raise the enrichment to a level that is suitable for weapons. Although the Iran claims, its nuclear program only serves for power generation, experts take a critical stance towards these statements. Common reactors are usually operated with uranium enriched only by 3.5%. The Iran's current stocks would be sufficient to run the country's reactors for the next ten years, they add. Hence there is no reason to increase production capacities for fuel rods for purposes of power generation
At the beginning of this week, neither the RSI nor the stochastic indicator give any impulsions to market players. Thus both indicators are seen as neutral. Markets are still extremely overbought and after the past weeks's price rally investors find a downward correction overdue. Currently, market participants are hardly ready to bet on falling prices and to keep their short positions, however. The insecurity and the risk regarding the development of the Iran-conflict is is regarded far too high. Hence, a downward movement would be only slowly and only possible to a limited extent. Given the lacking momentum and the clearly overbought situation, technical analysts expect prices to consolidate on a high level. Supports might be tested in the course of the day but without new fundamental or technical impulsions a significant downward correction seems unlikely.
U.S.
Nymex acces easing. Oil futures slightly retreat in Asian trading hours and on Globex electronic trading platform this morning. The traded volume is slightly above average. Market participants will eye the opening of the European session and forex markets for new impulsions. As to economic indicators, investors will probably already focus on tomorrow afternoon's figures eclipsing today's data.
Houston (ex-wharf indications 23-2)
380cst $722
180cst $763
MGO $1067
Very tight avails for 180 cst
New Orleans (ex-wharf indications 23-2)
380cst $724
180cst $766
MGO $1069
Singapore (correct as of 1430hrs LT - delivered indications)
Crude is cooling somewhat, but gaining still with WTI +$0.42 Singapore paper is softening as well with +$2.25 for 180cst and +$2.55 for 380cst for Mar, and for Apr 180 cst +$2.25 and 380cst +$2.55 with MGO contracts Mar -$0.20 and Apr -$0.20. The cargo market is gaining only slightly with 180cst +$5.24, 380cst +$4.36 and MGO +$0.90.
The Singapore fuel oil markets rose around $4.0- 5.0/mt during the morning last Friday, tracking crude movement. The Singapore heavy residual inventory saw a massive build of +2.04 mbbl to 21.74 mbbl; a 40 week record high. The delivered bunker premiums slipped to around $4.5 to $6.0 above cargo prices. This morning markets are trading higher.
High premiums for prompt deliveries.
380 cst $732
180 cst $740
MGO $1000
ARA (Amsterdam - Rotterdam - Antwerp)
Delivered bunker fuel prices across ARA remained bullish Friday, at levels not seen since 2008 on higher outright fuel and crude oil prices prompted by concerns over supplies from Iran. The strength in crude drove fuel oil values higher in Rotterdam even as fuel oil itself was largely under downward pressure, with the arbitrage closed for high sulfur fuel oil from Europe to Singapore. Although fuel oil arbitrage was closed market sources said inland demand in Europe was expected to firm as German business confidence surpassed forecasts. Rotterdam continued to report firm prices for prompt deliveries on the back of supply tightness and barge congestion.
Rotterdam
Indications for delivered bunkers:
380cst : $ 712
(1.0 %) :$ 752
180cst: $ 755
(1.0 %):$ 798
MGO 0.1%S: $1025
