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Despite of the rather bearish technical situation, oil futures have tested their upward potential during morning trade, with the Brent breaching its first resistance line at 105.10 dollars. The API's extremely bullish data have prompted a technical counterreaction after yesterday's losses. The topic of monetary policy has predominated financial markets for days, supporting oil prices. Yesterday there was a technical downward reaction as investors think that the ECB is far more likely to announce decisive measures of monetary easing than the FED. Better than expected US economic data, published yesterday afternoon, have confirmed these assumptions.

Oil futures at ICE and NYMEX traded sideways early Tuesday morning testing their supports. After first short-term supports had been breached, the one at 89.30 for the WTI crude proved strong making oil futures test their upward potential. The steadier euro and equities - marking some gains at that time - also provided some support and so oil prices tested their resistance lines at 914.25 dollars Gasoil and at 90.30 dollars WTI. These likewise proved strong. Market participants remained cautious until the afternoon, waiting for the decisions regarding the Fed's and the ECB's monetary policy that will be conveyed later this week. US economic data added a positive tone, with the House Price Index, the Chicago PMI and consumer sentiment according to the Conference Board all exceeded expectations. In general, better-than-anticipated data provide support but, at the same time, investors doubts increased that the Fed will actually already announce a new round of bond buying this evening. In the course of trade, oil futures breached several supports which triggered technical selling orders accelerating the decline. Analysts like Gene McGillian of Tradition Energy regard this as a mainly technical reaction, with investors reducing some weak long positions they had accumulated in the past few weeks. Profit taking continued until late in the evening until the clearly bullish API data triggered a slight movement up.

ICE Gasoil contract for August delivery settled at 906.25 dollars on Tuesday. This was 6.75 dollars below Monday's settlement. With some 45,500 contracts the traded volume was below average.

OPEC: According to an independent study regarding the OPEC's output, the latter decreased in July for the third time in a row. The total output is to amount to some 31.4 million barrels per day. In June, the OPEC produced 31.6 mbpd. Even though the production is slightly retreating, it is still higher than the production ceiling of 30 mbpd that was agreed upon on December 14 2011. With a decline of some 105,000 barrels per day, Saudi Arabia saw the most significant drop in oil production. Iran's production is also to have dropped significantly, by 100,000 bpd. Kuwait and Nigeria have marked the most significant increase in oil production, with 70.000, resp. 60.000 barrels per day more than in the previous month.

After yesterday's decline the stochastic indicator gives a new selling signal at ICE as well as at NYMEX this morning. Technically this is a clearly bearish signal indicating further tests of the downward potential. Analysts asses the situation as complex and volatile, as there are still some important fundamental news due (Fed meeting, DOE data, ECB meeting, US labor statistics) that are likely to have a major impact on oil prices.

U.S.

Nymex access gaining: Oil futures still proved rather nervous in Asian trading and on Globex electronic trading platform this morning. The API's data and the still steady euro provide some upside but some profit taking at Asian stock markets (see Nikkei 225), the worse than expected Chinese ISM PMI as well as the bearish technical situation weigh on prices. The traded volume is on average. Market participants now eye news regarding monetary policy, the performance of European stock and finance markets, as well as forex trade and today's economic indicators. They also look ahead to the DOE's data.

API's: Crude oil -11.6; distillates -1.4; gasoline -1.3 million barrels vs previous week. Refinery utilization -0.9%
DOE's; due out tonight
Forecasts: Crude oil -1.1; distillates +1.2; gasoline +0.7 million barrels vs previous week.

Houston (ex-wharf indications 31-7)

380cst $618
180cst $653
MGO $955

New Orleans (ex-wharf indications 31-7)

380cst $619
180cst $654
MGO $960

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

Crude is losing firmly with WTI -$1.76. Singapore paper is less bearish with -$2.20 for 180cst and -$3.00 for 380cst for Aug, and for Sep 180 cst -$2.70 and 380cst -$2.70 with MGO contracts Aug -$0.30 and Sep -$0.45. The cargo market is starting to turn as well, losing with 180cst -$0.35, 380cst -$0.61 and MGO -$0.34.

The Singapore fuel oil market prices lost somewhat during the morning window yesterday. The latest Singapore heavy residual inventory reported a slight build of 0.23 mbbl to 17.61 mbbl. This morning markets are trading slightly higher.

High premiums for prompt deliveries.

380 cst $625
180 cst $640
MGO $900

ARA (Amsterdam - Rotterdam - Antwerp)

In the ARA, fuel prices eased somewhat, keeping demand subdued. Not much demand seen, with loading delays and short cutter stocks preventing big losses. High premiums are charged for prompt enquiries.

Rotterdam

Indications for delivered bunkers:

380cst : $ 610
(1.0 %) :$ 656
180cst: $ 635
(1.0 %):$ 696
MGO 0.1%S: $895