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Crude futures fell this morning, pressured by news that Fitch Ratings had downgraded Japan's sovereign rating to A+ with a negative outlook. Japan's downgrade weighed on crude prices, though analysts said large moves were unlikely ahead of Wednesday's euro-zone summit and talks between Iran and western powers in Baghdad.

Oil prices started the day higher in London and New York, encouraged by positive signals from the G8 summit at Camp David over the weekend and supported by a stronger euro. Still, resistances proved strong at this time of the day, limiting the upside. An encouraging US indicator (the Chicago Fed national activity index stood at +0.11 in April v -0.44 in the previous month) helped oil and equities further up in the afternoon. A stronger euro finally tempted the WTI to breach its key resistance at 92.25 dollars, triggering more technical buying orders in the course of which more resistance lines were breached. Oil prices settled higher than in London and New York.

ICE Gasoil contract for June delivery settled at 911.50 dollars on Monday. This was 3.75 dollars above Friday's settlement. With some 60,100 contracts the traded volume was little above average.

OPEC: Saudi Arabia raised crude production by 0.7% to a near 31-year high at 9.92mbpd in March to become the world’s largest producer for the first time in 6-years, exports rose 3% in response to the cut in Iranian shipments. In April, China imported some 23.7% less of crude oil from Iran compared to the previous year. The country mainly substitutes the Iranian oil with imports from Saudi-Arabia. Saudi deliveries accordingly increased, making China's imports from the kingdom rise 14% compared to the previous year in April. China's total oil demand increased by +3.3% on year in the reported month.

The Stochastic oscillator turned bullish at the oversold level yesterday when its lines crossed see also technical analysis. WTI crude breached its key resistance at 92,25 dollars, completing the bullish pattern today. Since the beginning of May, when speculators engaged in short positions the WTI dropped almost 14 percent and the Brent lost about 11 percent. Nuclear talks with Iran ahead, operators sell their short positions and go long. Resistances at 93,80 dollars (WTI) and 110,55 dollars (Brent) should limit the upside today.

U.S.

Nymex access easing: Oil futures trade a bit lower in Asian trading and on Globex electronic trading platform this morning in a technical reaction to Monday's gains and weighed down by a stronger dollar vs the euro. The traded volume is little below average. Investors eye forex markets, tonight's API data and a few but important economic indicators.

Survey of US Petroleum inventories due out tonight at 22:30(API) and Wednesday at 16:30(DOE)

Crude oil +0.8; distillates +0.1; gasoline +0.1 million barrels vs previous week

Houston (ex-wharf indications 22-5)

380cst $639
180cst $671
MGO $975

New Orleans (ex-wharf indications 22-5)

380cst $630
180cst $673
MGO $970

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

Crude is slightly up with +$0.35 Singapore paper is tracking crude, bouncing up as well with +$5.00 for 180cst and +$3.15 for 380cst for June, and for July 180 cst +$5.00 and 380cst +$3.15 with MGO contracts June +$0.39 and Jul +$0.39. The cargo market is bearish still with 180cst -$18.02, 380cst -$20.86 and MGO -$2.00.

The Singapore fuel oil markets rose more than $4.5 during the morning yesterday. The delivered bunker premiums slipped to around $4.5 to $7.0 above cargo prices on higher outright prices. Bunker fuel oil swaps gained up to $5.50/mt at the front of the forward curve yesterday. Backend was slightly weaker, with calendar 2013 papers gaining only $1.25. This morning markets are trading slightly higher.

High premiums for prompt deliveries.

380 cst $645
180 cst $658
MGO $905

Fujairah (delivered indications 22-5)

380cst $668
180cst $689
MGO $1041

ARA (Amsterdam - Rotterdam - Antwerp)

The NWE bunker demand bounced up, after the bank holidays, tracking positive sentiment from equity markets in Europe. Local avails in Rotterdam on hsfo and lsfo are very tight, with no improvement expected before the and of this week.

Rotterdam

Indications for delivered bunkers:

380cst : $ 622
(1.0 %) :$ 669
180cst: $ 653
(1.0 %):$ 686
MGO 0.1%S: $910