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Oil prices are weaker this morning as traders reduce positions on news that Hurricane Isaac was only a Category 1 storm and appears to have caused little material damage to oil refineries along the US Gulf Coast. This afternoon, investors will, as usual, focus on the DOE's data on US oil inventories. These have been expected to show a moderate draw in crude oil and gasoline stocks (slightly bullish), but given last night's API figures that showed significant builds in crude stocks, market participants seem to have reconsidered their expectations. Prices also fell this morning after finance ministers from the world's leading G7called on oil producers to increase output and said they stood ready to ask the IEA to release strategic reserves.

After Monday's sharp decline the supports at oil markets proved strong on Tuesday which triggered a technical counterreaction. The softer dollar, resp. the stronger euro favored this development. Futures more and more tested their upward potential whereas the rise of ICE futures has already been capped by the Brent's resistance at 113.20 dollars and at the G.Oil's resistance at 987.50 dollars. Only the WTI crude succeeded in breaching first resistance lines, as the tropical storm Isaac has more influence on futures in New York than in London. The storm still had not become a hurricane by the evening and so market participants took some profits now and again. Late in the evening, after copy deadline, Maria van der Hoeven opposed the idea of releasing strategic reserves. According to the IEA, markets were sufficiently supplied. This has given a fillip to ICE futures in particular. With builds in crude oil and distillate stocks, the API's oil inventories data have brought some bearish cues later at night then.

ICE Gasoil contract for September delivery settled at 979.00 dollars on Tuesday. This was 3.75 dollars below Monday's settlement. With some 47,100 contracts the traded volume was on average.

The stochastic indicator gives a first buying signal at WTI charts this morning whereas it is considered as neutral for the Brent and the G.Oil. The lines of the indicator converge at Brent and G.Oil charts and so the bearish impact it had during the past few days. If the stochastic's lines cross in the course of the day, the technical constellation is likely to push oil futures higher. Therefore, technical analysts assess the situation as slightly bullish, all the more so, as the firm mid- and long-term supports point to an upward movement as well.

U.S.

Nymex access gaining: Oil futures have proved relatively nervous in East-Asia and on Globex electronic trading platform this morning. By now, the bearish factors (API data, still little damage done by Isaac) seem to have outweighed the bullish ones (IEA does not want to release strategic reserves), however. The traded volume is about on average. Market participants now eye Isaac's development as well as the performance of stock and forex markets and a today's economic indicators. They will also closely watch the DOE's data on oil inventories, published at 4.30 p.m.

API's: Crude oil +5.5; distillates +1.4; gasoline -2.4 million barrels vs previous week. Refinery utilization -1.2%
DOE's; due out tonight
Forecasts: Crude oil -1.1; distillates +0.1; gasoline -0.7 million barrels vs previous week

Houston (ex-wharf indications 28-8)

380cst $658
180cst $698
MGO $1040

New Orleans (ex-wharf indications 28-8)

380cst $662
180cst $700
MGO $1050

Singapore (correct as per 14:30hrs LT-delivered indications)

Crude is slowing with WTI -$0.47. Singapore paper is mirroring crude with -$5.25 for 180cst and -$6.55 for 380cst for Sep, and for Oct 180 cst -$5.25 and 380cst -$6.55 with MGO contracts Sep -$0.98 and Oct -$0.95. The cargo market is starting to react to the bearish sentiment with 180cst -$6.94, 380cst -$6.44 and MGO -$1.84.

The Singapore fuel oil markets were down more than -$6.5 during the morning Platts window. The strong demand for cargoes has lifted the cargo premium to around $4.5 yesterday. The delivered bunker premiums similarly inched up to around $8.25 above the cargo prices. This morning markets are trading slightly down.

High premiums for prompt deliveries.

380 cst $664
180 cst $677
MGO $970

ARA (Amsterdam - Rotterdam - Antwerp)

The ARA prices eased somewhat, but not much demand survaced. Loading delays are less frequently seen. With short cutter stocks underpinning the markets and a heavy maintenance programme for September with two important North Sea oilfields set for a one month closure. High premiums are charged for prompt enquiries. Antwerp reports some delays still.

Rotterdam

Indications for delivered bunkers:

380cst : $ 645
(1.0 %) :$ 695
180cst: $ 670
(1.0 %):$ 733
MGO 0.1%S: $973