---

Oil prices have gained considerable ground in the morning in a technical reaction on yesterday's losses. More momentum has been provided by the draws in crude oil and distillate stocks the API's data showed last night. More directive news expected after the publication of the DOE figures later today.

Monday evening, market players started to price in the possible shut-down of more installations in Norway but they reduced these long positions on Tuesday morning, as the Norwegian government ordered a compulsory settlement of the strike. Falling short of expectations, data on China's imports and oil demand also weighed on oil futures. In the afternoon, stronger equities and the advancing euro caused a slight correction up which lead to a test of first and second resistance lines. British industrial prices came out far better than forecast and unexpectedly provided financial markets with bullish cues - but only temporarily. Later in the afternoon and in the evening the euro and equities have shed their gains increasing the selling pressure at oil markets. The EIA's bearish monthly report added to the downside and so quotations retreated in late trade settling near their intraday lows.

ICE Gasoil contract for July delivery settled at 875.50 dollars on Tuesday. This was 1.75 dollars above Monday's settlement. With some 39,300 contracts the traded volume was below average.

OPEC: Iran's oil minister has called for an irregular meeting of the OPEC member states at the beginning of this month, as the oil price remains clearly below 100 dollars and might even fall further down. Algeria backed this demand. The OPEC's secretary general, Iraq's oil minister Abdul Kareem Luaiby, passed the decision on to the members of the organisation. In a latter dispatched on Thursday Luaiby called for a vote regarding this request. There are no reports on any official responses or decision yet.

The stochastic is still slightly bearish but has lost impact as its lines approach. However, there will only be a buying signal if these lines renewedly cross. Analysts thus assess the situation as neutral. But since there are still some fundamental factors due this week (as the DOE's oil inventories data, Chinese economic data, the IEA's and the OPEC's monthly energy reports), the technical situation might be rather secondary. Trade may thus become more volatile, according to analysts.

U.S.

Nymex access gaining: Oil futures have edged higher in Asian trading and on Globex electronic trading platform this morning. Traders speak of a technical counter-reaction on yesterday evening's losses. The traded volume is slightly above average. Market players now eye equity and forex markets as well as the OPEC's monthly energy report and the DOE's data on US oil inventories. As to economic indicators, the German consumer price index is scheduled in the morning. The US trade balance and wholesale inventories may provide some cues in the afternoon.

API's: Crude oil -0.7; distillates -0.7; gasoline +2.5 million barrels vs previous week. Refinery utilization -0.6%
DOE's; due out tonight
Forecasts: Crude oil -1.3; distillates +0.5; gasoline -0.4 million barrels vs previous week

Houston (ex-wharf indications 10-7)

380cst $553
180cst $598
MGO $867

New Orleans (ex-wharf indications 10-7)

380cst $563
180cst $598
MGO $870

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

Crude is bouncing up slightly with WTI +$0.23. Singapore paper is bearish still with -$2.70 for 180cst and -$1.50 for 380cst for Jul, and for Aug 180 cst -$1.95 and 380cst -$2.25 with MGO contracts Jul -$0.06 and Aug -$0.14. The cargo market is gaining bearish momentum with 180cst -$10.32, 380cst -$10.53 and MGO -$0.90.

The Singapore fuel oil markets prices came off by more than $2.0/mt Yesterday morning. Market saw more selling interest which resulted in weakened Asian Fuel Oil cracks. The delivered bunker premiums were at approx. $7.75/mt above cargo prices Yesterday. Bunker fuel swaps lost approx. $1.00 - 1.25/mt shifting the whole forward curve slightly lower. Markets are trading slightly lower this morning.

High premiums for prompt deliveries.

380 cst $590
180 cst $600
MGO $850

ARA (Amsterdam - Rotterdam - Antwerp)

Both hsfo and lsfo prices eased somewhat on softer crude values, but ARA prices are still underpinned by continuing barge congestion. Not much relief is expected before the end of the week, with continuing loading delays, cutter stock shortages and arbitrage loadings reported. High premiums are charged for prompt enquiries.

Rotterdam

Indications for delivered bunkers:

380cst : $ 571
(1.0 %) :$ 618
180cst: $ 594
(1.0 %):$ 637
MGO 0.1%S: $875