The stochastic's lines have crossed by now, giving a buying signal to market players, whereas the RSI still moves below the 30%-line. Futures remain in oversold territory, allowing for a technical upward reaction on short-covering and speculative short-term buys. Merely technical, the situation is thus slightly bullish, whereas the fundamental factors currently tend to eclipse the technical analysis. Oil futures at ICE and NYMEX lost considerable ground on Monday morning, continuing last week's sharp decline. Despite the slightly stronger euro, quotations dropped to their first supports on a technically and fundamentally bearish constellation. At ICE these supports have been breached by noon. Given the steep down trend more and more market players reduced their long positions before markets saw a technical correction in the afternoon. The euro was able to pull back from its longtime lows, even scratching at its 1.25 dollar resistance in the course of the day. This resistance proved strong until the evening and was not breached sustainably. The common currency's gains and the the fact that oil futures at ICE and NYMEX were significantly oversold allowed for an increase in prices in the afternoon. This correction is said to have been triggered by the expectations regarding telefone conference of the G7 states which is scheduled this morning. Speculators took some profit from their short positions. Inspite of the new 16-month low oil futures at ICE marked temporarily, quotations were able to pare their losses in late trade.
ICE Gasoil contract for June delivery settled at 843,00 dollars on Monday. This was 4.75 dollars below Friday's settlement. With some 28,600 contracts the traded volume was far below average.
After having marked some gains in the early morning as investors were hopefully looking ahead to the G7's conference call, the European currency plummeted only a few hours later, when Spain's minister of Finances, Cristobal Mantoro, announced that the country might need a bailout to stem the crisis of its banking sector. Up to then, Spain had reiterated that it would try to tackle its financial problems without outside funds. Today, Motoro said in an interview that Spanish banks don’t need “excessive” amounts to recapitalize, and the question is “where that figure comes from”. Banco Santander SA (SAN) Chairman Emilio Botin said yesterday that about 40 billion euros of European funds for four seized lenders including Bankia group would be enough to solve the industry’s problems. Germany opposes empowering Europe’s bailout fund to provide money directly to banks and the rules require it to be funneled through governments. Montoro also said European leaders should approve a “banking union” at their summit at the end of the month. He stuck to the government’s view that the nation won’t need an overall bailout, saying it’s “technically” not possible to rescue Spain. Technically, the stochastic indicator is still bullish for the euro. With the buying signal of the RSI, which crossed the 30%-line bottom-up, the euro has some upward leeway in case of bullish fundamental cues. The latest news regarding Spain have however eclipsed this for the time being. The euro last sold at 1.2421 dollar. Its resistances are seen at 1,2550 dollar, at 1,2565 dollar, at 1,2575 dollar and at 1,2625 dollar. Supports are at 1,25 dollar, at 1,2475 dollar, at 1,2450 dollar, at 1,2395 dollar and at 1,2365 dollar.
In the wake of the European currency's sharp decline caused by bad news about Spain's financial situation, oil futures have shed some gains. The Brent and the WTI crude have even fallen to their second support lines. This morning, the Spanish minister of Finances has pleaded for external financial aid for the first time. Equities also marked losses after this statement.
• The Chinese HSBC services PMI rose to 54.7 points after 54.1 points in the previous month.
• Euro zone services PMI: 46.7 in May (previous month: 46.9; forecast: 46,5).
• Retail sales: -1.0% in April (previous month +0.3%; forecast: -0.1%).
• The German services PMI: 51.8 in May, (previous month: 52.2; forecast: 52.2).
U.S.
Nymex access gaining: Oil futures have hardly changed in Asian trading and on Globex electronic trading platform this morning. After yesterday's correction oil prices trade sideways in a narrow range. The traded volume is clearly above average. Market players now look ahead to the performance of stock and forex markets, the results of the G7 talks and today's economic indicators.
Economists forecast modest draws in US crude oil and a build in gasoline and distillate stocks as refiners are expected to have ramped up production.
Singapore (correct as of 1430hrs LT - delivered indications)
Crude is has hit the current bottom of the curve and is now bouncing with WTI +$1.77. Singapore paper is cautious with +$3.00 for 180cst and +$2.50 for 380cst for Jun, and for Jul 180 cst +$2.50 and 380cst +$2.50 with MGO contracts Jun +$1.30 and Jul +$1.15. The cargo market is yet to react still on the downward curve with 180cst -$28.84, 380cst -$28.31 and MGO -$3.17.
Market saw more selling interest that placed pressure on the Asian fuel oil cracks. The delivered bunker premiums were seen at around $6.0 above cargo prices yesterday. The Northwest European fuel oil market started the week with significant falls.
High premiums for prompt deliveries.
380 cst $580
180 cst $570
MGO $820
ARA (Amsterdam - Rotterdam - Antwerp)
Rotterdam
Indications for delivered bunkers:
380cst : $ 563
(1.0 %) :$ 602
180cst: $ 588
(1.0 %):$ 625
MGO 0.1%S: $848
