Investors took some profit Wednesday morning on retreating equities, the softer euro and the technical situation which was slightly bullish in the morning. Oil futures at ICE fell through their first short term supports but losses were limited by their second supports at 988.00 dollars (G.Oil) or at 117.50 dollars (Brent). As in the past few days, WTI futures remained relatively firm, narrowing the spread between the Brent and the WTI crude for June delivery to some 13 dollars. Only the DOE's data on US oil inventories provided new impulsions. Oil futures declined at ICE as well as at NYMEX after builds in crude oil stocks came out far higher than expected in a previous survey. Supports that had remained stable until then were breached, increasing the technical selling pressure. Only at 116.80 dollars (Brent) and at 984.50 dollars (G.Oil) selling orders ebbed. ICE futures and product contracts then saw a slight correction up in the course of the evening which was prompted by the draws in US diese and gasoline stocks and the recovering euro. Only the WTI crude continued to trade lower which underlined the exceptional position the US benchmark blend is currently taking. This morning, the stochastic indicator gives a selling signal for the WTI crude, whereas the DOE's data showing builds of the benchmark blend in the United States have a slightly distorting effect. As to the ICE Brent and the G.Oil, the indicator is still slightly bearish but its lines already approach each other again. If they cross, there will be a buying impulsion. That is why we assess the situation as neutral this morning. The ICE G.Oil's mid-term support at 985.00 dollars has proved strong for the time being, and the Brent's downward potential may be limited by its support at 116.30 dollars. Technical analysts only expect larger selling orders, if quotations fall below these marks. As to gains, there is some space left until oil futures reach the resistances limiting the trend channels. If these are breached, however, the stochastic indicator might develop a buying signal triggering a technical reaction up.
ICE Gasoil contract for May delivery settled at 985.50 dollars on Wednesday. This was -8.75 dollars below Tuesday's settlement. With some 65,900 contracts the traded volume was above average.
High crude inventory builds over the last months show that the crude market is currently oversupplied. Even though the draw in oil products counteracts the high build in crude oil it poses no real threat to supply as demand remains weak.
The resumption of the talks on Iran's nuclear programme has reduced the geopolitical risk premium on oil and the preponed reversal of the Seaway pipeline has helped to reduce the spread between the two benchmark crudes.
Delta Air Lines is interested in purchasing a 185.000 barrel per day ConocoPhillips refinery that the company had idled in September due to product imports, weakness in motor fuel demand and costly regulatory requirements. Some analysts estimate that the facility could be up and running as early as July which would have a bearish effect on oil markets.
U.S.
Nymex access gaining: Oil futures have traded slightly higher in Asian trading and on Globex electronic trading platform this morning. The WTI crude only hardly changed. The traded volume has been far below average. As to the WTI crude, market participants are gradually switching from the contracts for May delivery to those for June delivery, as the current front month is going to expire tomorrow. Investors now watch the performances of stock and forex markets, and a string of US economic indicators that are to be published this afternoon.
Like the API's forecast, the DOE reported some builds in crude oil stocks and draws in product reserves, whereas the DOE's data partly showed more significant changes in oil inventories than did the API. Refinery runs have also come out higher than forecast. The figures were released as follows:
Market participants put their focus on the higher than expected builds in crude oil stocks first. These builds had a cleary bearish effect on oil futures. As these builds have mainly been accumulated at the USA's west coast, and as product stocks showed massive draws, the DOE's data also had a clearly bullish note which caused an upward correction after the initial profit taking. Only the WTI crude remained lower, as stocks in Cushing emerged higher. Crude oil stocks in Cushing rose to an 11-month high. US crude oil inventories in general also marked a 10-month high.
Houston (ex-wharf indications 19-4)
380cst $693
180cst $721
MGO $1040
New Orleans (ex-wharf indications 19-4)
380cst $696
180cst $724
MGO $1045
Singapore (correct as of 1430hrs LT - delivered indications)
Crude losing some of yesterday's gains at the moment with WTI -$1.42. Singapore papernot buying the drops yet really with +$2.10 for 180cst and +$3.50 for 380cst for May, and for June 180 cst +$2.20 and 380cst +$2.75 with MGO contracts May +$0.35 and June +$0.34. The cargo market is now turning bullish with its lag with 180cst +$1.27, 380cst +$0.91 and MGO +$0.09.
The Singapore fuel oil markets gained app. $1.0/mt during the morning Platts window yesterday. There is support buying especially in the 380cst fuel oil with 4 cargoes transacted at more than $2.0 premium. The delivered bunker premiums maintained around $7.0 above cargo prices. Bunker fuel oil swaps lost up to $9/mt at the front and app. $7.50/mt at the backend of the forward curve both for Rotterdam and Singapore papers.
High premiums for prompt deliveries.
380 cst $708
180 cst $718
MGO $970
Fujairah (delivered indications 19-4)
380cst $720
180cst $745
MGO $1050
ARA (Amsterdam - Rotterdam - Antwerp)
In the ARA region, high and low sulfur product remains very tight in Rotterdam, with better avails expected from the end of next week. Antwerp also is tight for low sulphur.
Rotterdam
Indications for delivered bunkers:
380cst : $ 683
(1.0 %) :$ 740
180cst: $ 711
(1.0 %):$ 767
MGO 0.1%S: $990
