Oil futures at ICE and NYMEX lost ground in electronic morning trading as market participants got rid of Wednesday's long positions, realizing that the previous day's strong price increase was exaggerated and the DoE data's bearish impact hit the market with a delay. At noon oil prices in London and New York had already dropped below several support lines. The slightly bullish technical constellation and a strong support at 99.70 dollars (Brent) stopped the collapse, supporting the subsequent rise that was triggered by a succesful Spanish debt auction and the suprise cut of Chinese interest rates, the first since 2008. This happened at a time of the day when market participants still hoped that FED chief Ben Bernanke would announce more stimulus measures for the US economy in his speech before the congress. But Bernanke offered few hints that further monetary stimulus was imminent, saying the U.S. central bank was ready to shield the economy if financial troubles mount. He also warned of "significant risks" to the U.S. recovery from Europe's debt and banking crisis. Disappointed investors hurried to get rid of their bullish bets and sold their long positions, pushing oil back down below support lines where a string of technically motivated selling orders accelerated the decline. The WTI in New York is headed for its longest weekly loosing streak in 13 years. With important Chinese indicators due at the weekend analysts do not expect market participants to engage in too many buying orders today.
The RSI changed direction at all charts yesterday and is considered neutral this morning. The Stochastic indicator is no more at the oversold level, giving markets no clear signals for the time being, still its two lines are converging. Should they cross, a selling signal will be triggered. Technical analysts are neutral this morning but the technical constellation indicates a possible bearish market development for today.
ICE Gasoil contract for June delivery settled at 858,75 dollars on Thursday. This was 6.75 dollars below Wednesday's settlement. With some 49,500 contracts the traded volume was only little below average.
Global oil markets are well-supplied and OPEC members will consider in their next meeting on June 14th whether action is needed to keep the market balanced amid signs of stagnating demand growth, Algerian Oil Minister Yousfi said Thursday on the sidelines of a gas conference in Kuala Lumpur. OPEC was concerned about the financial difficulties in Europe which may lead to a slowdown in demand, so the minister. The Group still favours a barrel price of around 100,00 dollars a day as fair and justified. Meanwhile Iranian oil minister Rostam Ghasemi said he would "insist" on OPEC going back to its previously agreed output ceiling at the June meeting. OPEC's actual output exceeds its official production ceiling by 1 million-2 million barrels a day. Some OPEC members, Algeria among them, are currently working to increase their spare capacity. is currently producing around 1.2 million barrels of crude oil a day and has spare capacity of around 200,000 barrels a day, with total capacity. Market participants will eye next week's OPEC meeting for comments on an output cut and the new round of nuclear talks between Iran and Western powers beginning June 20th. Analyst Jim Ritterbusch is opting for fresh lows by crude futures as early as next week as he expects a contentious OPEC meeting, some slight progress at the Iranian nuclear discussions and some negative vibes out of the Greek elections to offer bearish guidance to the oil in next week's trade.
Total Chairman Christophe de Margerie also commented on the current market situation Thursday. On his opinion OPEC has all the means to avert a big slide in oil prices when oil ministers meet next week in Vienna, but he thinks it unlikely that the group will announce any plans to cut production to boost crude oil prices. The temporary oversupply of the market should be reabsorbed soon as geopolitical tensions remain acute, he said, in a reference to the sanctions against Iran and the civil unrest in Syria which forced the French major to stop production there earlier this year. Apart from that with Europe facing a major economic crisis and with the latest data casting doubt on the strength of the U.S. economic recovery, a strong rise in oil prices would dent demand even more. As a tribute to the slowdown in demand, Total has turned two of its European refineries into storage plants and cut some capacities of its Normandy refinery.
The euro fell abruptly this morning as hopes for a fresh round of global monetary policy easing dimmed and investors' focus swung back to Spain's banking crisis and the prospect of slower economic growth in Germany and China. A three-notch ratings downgrade from "A" to "BBB" for Spain by Fitch at a time of raised expectations it may need an international bailout boosted demand for the safe-haven dollar and weighed on the euro. The lack of a clear signal from Federal Reserve Chairman Ben Bernanke on imminent quantitative easing in testimony to Congress on Thursday overshadowed what had been a positive reaction in world financial markets to a Chinese interest rate cut. Flagging demand from the euro zone causing a big drop in German exports and imports in April also weighed on the euro while a deluge of May Chinese data due over the weekend is expected to paint a grim picture. The euro last sold at 1,2474 dollars, having already breached the first support lines. More support is seen at 1,2440 dollars and 1,2385 dollars today. Resistances are at 1,2575 dollars, 1,2600 dollars, 1,2625 dollars, 1,2665 dollars.
U.S.
Nymex access losing: Oil futures are losing ground in Asian trading and on Globex electronic trading platform this morning extending Thursday's losses. The brent currently sells clearly below 100,00 dollars with a bearish tendency. The traded volume is significantly above average. Market players will eye stock and forex markets today and a few economic indicators in the USA and the euro zone.
Houston (ex-wharf indications 6-6)
380cst $570
180cst $606
MGO $875
Very tight avails for 180 cst
New Orleans (ex-wharf indications 6-6)
380cst $573
180cst $609
MGO $879
Singapore (correct as of 1430hrs LT - delivered indications)
Crude is now losing majorly after Bernanke's speech with WTI -$2.38. Singapore paper is following with -$12.25 for 180cst and -$12.90 for 380cst for Jun, and for Jul 180 cst -$11.75 and 380cst -$12.00 with MGO contracts Jun -$2.31 and Jul -$2.09. The cargo market is slowing in its gains now as it starts to react with 180cst +$4.27, 380cst +$6.71 and MGO +$0.76.
The Singapore fuel oil markets were up +$4.0- 7.0/mt during the morning Platts window yesterday. The Singapore heavy residual inventory saw a slight draw of -0.61 mbbl to 19.7 mbbl. The delivered bunker premiums were higher more than $9.0 above cargo prices.
High premiums for prompt deliveries.
380 cst $580
180 cst $595
MGO $815
Fujairah (delivered indications 8-6)
380cst $596
180cst $620
MGO $1030
ARA (Amsterdam - Rotterdam - Antwerp)
The Northwest European bunker market saw variable demand Thursday as many buyers hesitated to fix in the afternoon following a $2/barrel in Brent crude prices, sources said. High and lows sulfur fuel oil in Rotterdam remained tight following limited blending components in the region and recent Suezmax loadings which has sustained the market because of the avails on both HS and LS. With most suppliers fully booked for the week, earliest already looks like the 13th for suppliers to load new product.
Rotterdam
Indications for delivered bunkers:
380cst : $ 567
(1.0 %) :$ 611
180cst: $ 591
(1.0 %):$ 624
MGO 0.1%S: $841
