Oil prices in London and New York retreated in electronic morning trading when market participants appreciated last week's bearish fundamentals. Talks between global powers and Iran last weekend concluded with a decision to hold another round of discussions May 23 in Baghdad. No firm commitments emerged from the talks, which centered around Tehran's nuclear program. But analysts and traders said the decision to continue dialogue reduces the risk of war or of an imminent supply disruption. Prices rose modestly at noon, lead by the U.S. benchmark when traders bet on a reduction of the Brent-WTI front month May spread, selling the brent and buying the latter but soon thought better in view of the pending expiry of the WTI front month May contract. Later in the session the WTI surged once again when an updated timeline on the reversal of the Seaway oil pipeline helped ease Brent prices and boost the U.S. benchmark. While the brent marked an 8-week low towards the end of the session, the WTI settled higher in the end. When support lines at the ICE were breached yesterday and the Stochastic oscillator's two lines crossed a strong selling signal was triggered. The Stochastic has also crossed at the WTI chart but signals more downside, so technical analysts expect oil prices to keep following their downtrend and hit more support lines in the course of today's sessions.
ICE Gasoil contract for May delivery settled at 994,00 dollars on Monday. This was 14,50 dollars below Friday's settlement. With some 74,500 contracts the traded volume was far above average.
The Seaway pipeline currently moves oil from the main U.S. oil storage hub of Cushing to refineries on the Gulf coast. Now the pipeline's flow direction will be reversed because the lack of transportation between the middle U.S. and the Gulf Coast has caused a supply glut and dropping prices for the WTI. The bottleneck is partially responsible for the high spread between the brent and the U.S. benchmark oil prices. The reversal had been expected to start up by June 1 but it is running ahead of schedule, and the delivery of crude oil southward could begin on or around May 17, so Rick Rainey, a spokesman for Enterprise Products Partners LP. As much as 150,000 barrels a day will be moved this year and will be expanded to 400,000 barrels a day early next year.
The earlier reversal raises demand for WTI crude as Gulf Coast refiners earlier than expected have access to the cheaper oil from the heartland. As a consequence the spread between the brent and the WTI futures for June delivery has already dropped to below 15 dollars. This effect was most noticeable last night between 6.30 and 7.00 p.m., when the antedating was announced.
Oil futures are losing a bit of ground in Asian trading and on Globex electronic trading platform this morning, extending yesterday's selloff, but traders are cautious ahead of US oil inventories data. The traded volume is clearly below average. Market participants will eye today's API data and a string of economic indicators.
The euro has erased its earlier losses after its first support at 1,31 remained strong and stock exchanges opened with some gains.
The common currency edged a little earlier, a day after it had pulled away from two-month lows against the dollar. It still remains vulnerable ahead of a Spanish bond auction as worries about the euro zone's debt show no signs of abating.
Spain is set to see its borrowing costs leap when it sells short-term bonds after concerns over its deficit and banking sector pushed longer term risk premiums above 6 percent and drove the cost of insuring its debt to a record high. The developments fuelled concerns the country might fail to meet deficit targets as it acknowledged it has probably tipped into its second recession since 2009. That would raise the risk of it being pushed into seeking an international bailout. Spain holds auctions of two-year and 10-year bonds on Thursday. Any sign that 10-year yields are heading closer to 7 percent - a level regarded as unsustainable - could prompt further euro weakness. The ZEW German sentiment index due at 11 a.m. could also swing the market in the event-packed day. It is seen dropping, to 20.0, from 22.3 in March - its highest level since June 2010. From the technical stance, yesterday evening's correction up has slightly eased the selling pressure, whereas the stochastic indicator remains modestly bearish.
The euro last sold at 1.3136 dollar after 1.3133 dollar last night. The single currency has support at 1,31 dollar, at 1,3065 dollar at 1,3030 dollar and at 1,30 dollar today. Resistances are at 1,3145 dollar, at 1,3180 dollar, at 1,32 dollar and at 1,3235 dollar.
U.S.
Nymex access bearish: Oil futures are loosing a bit of ground in Asian trading and on Globex electronic trading platform this morning, extending yesterday's selloff, but traders are cautious ahead of US oil inventories data. The traded volume is clearly below average. Market participants will eye today's API data and a string of economic indicator.
DOE Forecasts: Crude +1.3 million, gasoline -1.025, distilaltes -25k bbl with refinery runs +0.6%.
According to Dow Jones U.S. crude imports dropped 13 percent to 8.52 million barrels a day in the week ended April 6, the biggest drop since January, last week’s report showed. Shipments arrived at an average rate of 8.9 million barrels a day this year. U.S. crude output rose to 6.05 million barrels a day in the week ended March 30, the highest level 1n 12 years.
Houston (ex-wharf indications 17-4)
380cst $707
180cst $735
MGO $1027
Very tight avails for 180 cst
New Orleans (ex-wharf indications 17-4)
380cst $709
180cst $737
MGO $1037
Singapore (correct as of 1430hrs LT - delivered indications)
Crude is continuing to fall with WTI -$0.42. Singapore paper is following alebit slowing now with -$4.20 for 180cst and -$4.05 for 380cst for May, and for June 180 cst -$4.20 and 380cst -$4.10 with MGO contracts May -$0.75 and June -$0.72. The cargo market has now adopted the bearishness with 180cst -$9.75, 380cst -$9.27 and MGO -$1.22.
High premiums for prompt deliveries.
380 cst $705
180 cst $715
MGO $975
ARA (Amsterdam - Rotterdam - Antwerp)
Loading delays continue to be an issue in Rotterdam with significant premiums being applied to prompt product with particular problems on LS.
Rotterdam
Indications for delivered bunkers:
380cst : $ 687
(1.0 %) :$ 748
180cst: $ 714
(1.0 %):$ 775
MGO 0.1%S: $997
