Crude prices fell yesterday, while U.S. crude inched up in seesaw trade ahead of a European Central Bank meeting and a U.S. August payrolls report as investors await central bank action in the face of slowing economic growth. Investors are likely to remain cautious ahead of the run-up and so markets are likely to become volatile. Therefore even smaller orders might have a major effect on oil prices.
Wednesday Oil futures at ICE and NYMEX have already tested their downward potential on Wednesday morning, as the slightly bearish technical constellation has shown its impact. The steady euro and rising equities limited the downward movement at oil markets around noon but the bearish factors have prevailed in the end. In the course of the afternoon, the lines of the stochastic indicator have also crossed at the WTI charts. This has favoured technical profit taking and has sent the Brent down to its support at 112.90 dollars. The long-term support has not been sustainably breached, however, and so has limited oil futures' downward potential. Traders are currently focusing on the ECB's decision. Most of them expect the central bank to announce more expansive measures but there are more and more investors who doubt this. Therefore, oil futures have remained very volatile during late trade on Wednesday marking some significant oscillations. While futures at ICE have settled with considerable losses, the WTI has regained some ground again in late trade, however, marking some gains at the time of settlement. As to US oil inventories, traders expected a significant draw in crude oil stocks, given the production losses caused by Isaac Hurricane. Therefore they have reduced their bets on a higher spread between the ICE Brent and the WTI crude. The API's data, published at 10.30 p.m. last night, have confirmed investors' expectations giving a bullish picture for crude oil stocks.
ICE Gasoil contract for September delivery settled at 981.50 dollars on Wednesday. This was 16.50 dollars below Tuesday's settlement. With some 47.000 contracts the traded volume was slightly below average.
The OPEC's oil output rose for the first time in three months in August. Crude-oil production from the group averaged 31.835 million barrels a day in August, up about 390,000 barrels a day from 31.445 million barrels a day in July, according to an independent survey. The largest increase in production of 210,000 barrels a day came from Iraq, which broke above the 3 million barrels a day threshold in August and continued to outstrip Iranian output. Iranian output also experienced a slight bounce in the reported month, despite tight sanctions against the country, including a total European Union embargo on Iranian crude that came into effect on July 1.
The stochastic indicator is still bearish this morning, pointing to a renewed test of the downward potential. The Brent hit a low at 112.73 dollars yesterday but this was late in the evening, when oil markets were rather volatile. Therefore its long term support is not seen as sustainably breached yet and is likely to limit the downward movements today, too. If this line is breached in the course of the day, there will be more slack for the Brent down to 111.50 dollars. Technical analysts stress however, that the macroeconomic data might put the technical factors into the background today.
U.S.
Nymex access firming: Oil futures have proved rather volatile in East-Asia and on Globex electronic trading platform this morning. The volatility the market saw last night has remained this morning, with oil futures trading near the level they had yesterday evening. The traded volume is on average. Investors today look ahead to the development at stock and forex markets, as well as the scheduled economic data. They are also eying the DOE's data on US oil inventories.
API's: Crude oil -7.2; distillates -0.1; gasoline -2.3 million barrels vs previous week. Refinery utilization -3.8%
DOE's; due out tonight
Forecasts: Crude oil -5.2; distillates -2.2; gasoline -3.6 million barrels vs previous week.
Houston (ex-wharf indications 5-9)
380cst $658
180cst $701
MGO $1057
New Orleans (ex-wharf indications 5-9)
380cst $660
180cst $704
MGO $1060
Singapore (correct as per 14:30hrs LT-delivered indications)
Crude is more bullish in nature with WTI +$1.74. Singapore paper is rising with +$2.55 for 180cst and +$2.40 for 380cst for Sep, and for Oct 180 cst +$2.75 and 380cst +$2.95 with MGO contracts Sep -$0.05 and Oct +$0.15. The cargo market is holding strong, gaining with 180cst +$2.75, 380cst +$2.95 and MGO +$0.15.
The Singapore fuel oil markets plummeted more than -$13.5 during the morning Platts window yesterday tracking crude movements. Despite the lower price, demand was said to be slow yesterday. The delivered bunker premiums strengthened to $9.0- 10.0 yesterday as sellers were reluctant to sell at lower outrights. Bunker fuel oil swaps lost app.$8.5/mt at the front of the forward curve for Singapore papers. The Backend was slightly stronger, losing app.$5.5/mt. This morning the market is trading slightly higher.
High premiums for prompt deliveries.
380 cst $675
180 cst $690
MGO $980
ARA (Amsterdam - Rotterdam - Antwerp)
The ARA is well supplied, with some demand picking up. Loading delays are less frequent, but some suppliers in Antwerp are running low on high sulfur fuel oil. One refinery is due to shut down for maintenance, possibly lasting for a couple of weeks. 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.
Rotterdam
Indications for delivered bunkers:
380cst : $ 658
(1.0 %) :$ 725
180cst: $ 681
(1.0 %):$ 748
MGO 0.1%S: $980
