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Crude prices reversed and moved lower in European trading hours on Wednesday, as the dollar strengthened and optimism after a surprise boost to the Bank of Japan’s asset-buying program faded. The October contract of light-sweet-crude-oil futures CLV2 -0.63% lost 58 cents, or 0.6%, to $94.71 a barrel in electronic trade, after sliding $1.33 in the regular New York Mercantile Exchange session Tuesday.

The reasons for oil prices' massive slide Monday night are yet to be found. There have been rumours regarding the release of strategic reserves as well as producer hedging but these are mere speculations. Left without any clue, market participants avoided larger positions on Tuesday, be it long or short. Futures proved rather volatile until the afternoon but remained range bound. The Brent's support at 113.00 dollars remained strong after several tests and the Gasoil was unable to sustainably breach its support at 984.00 dollars. The economic indicators published yesterday have not had any major impact on oil markets. However, the stronger dollar - which had profited from hopes on new expansive measures by Asian central banks - has weighed on quotations. Euphoria regarding interventions by the Fed and by the ECB had meanwhile ebbed and so investors took some profit in late trade, given the raise of long positions in the past few weeks, the scepticism regarding the debt crisis, the slightly bearish technical situation and the stronger dollar. At ICE, some of the supports that had been strong in the afternoon have been breached providing more downward potential. Supports at 976.75 dollars for the Gasoil, at 111.45 dollars for the Brent and at 95.00 dollars for the WTI have capped losses, however, and so oil futures have not dropped as low as on Monday.

OPEC: Global oil demand is poised to be depressed for the next 18 months while supply levels from OPEC countries are at fairly comfortable levels, the West's energy agency the IEA said. The IEA said it made no significant changes to its global oil demand outlook and forecast demand would grow at a steady rate of around 0.8 million barrels per day (bpd) or 0.9% in both 2012 and 2013. Some analysts said the oil demand outlook would probably be marked down by the IEA in the future.

ICE Gasoil contract for October delivery settled at 988.50 dollars on Tuesday. This was 22.00 dollars below Monday's settlement. With some 72,000 contracts the traded volume was well above average.

The stochastic indicator remains slightly bearish this morning, whereas the RSI is still neutral, see also technical analysis. The bearish influence of the stochastic currently keeps declining, as oil futures are no longer overbought and the indicator had already given its selling signal on Monday evening. Technical analysts expect trade to remain very volatile until the weekend, as market participants are likely to stay alert after Monday's plunge restructuring their riskier assets.

U.S.

Nymex access stable : Oil prices have traded steadier on Globex electronic trading platform this morning. Along with Asian equities and the stronger euro, oil futures have tested their upward potential, pulling back from their lows. The Bank of Japan announced more expansive measures of monetary policy this morning. The traded volume is on average. Investors now eye the development at stock and forex markets as well as today's economic indicators and the DOE's oil inventories data, published at 4.30 p.m.

API's: Crude oil +2.4; distillates -1.1; gasoline +0.1 million barrels vs previous week. Refinery utilization +0.1%
DOE's; due out tonight
Forecasts: Crude oil -1.1; distillates +0.8; gasoline +0.6 million barrels vs previous week

Houston (ex-wharf indications 18-9)

380cst $661
180cst $706
MGO $1060

New Orleans (ex-wharf indications 18-9)

380cst $666
180cst $709
MGO $1065

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

Crude is steady with WTI -$0.33. Singapore paper is bearish with -$6.20 for 180cst and -$7.03 for 380cst for Oct, and for Nov 180 cst -$6.20 and 380cst -$7.30 with MGO contracts Oct -$0.55 and Nov -$0.55. The cargo market is falling with 180cst -$17.18, 380cst -$15.79 and MGO -$3.00.

The Singapore fuel oil markets plunged more than $15.0 during the morning Platts window yesterday. The delivered bunker premiums strengthen to around $9.0- 10.5 above cargo prices as crude remained choppy and the lower outright prices lifted demand. Bunker fuel oil swaps lost more than $18/mt at the front of the forward curve for Singapore papers. Backend was slightly stronger, posting app.$16/mt losses. This morning the market continues to trade down.

High premiums for prompt deliveries.

380 cst $664
180 cst $678
MGO $970

ARA (Amsterdam - Rotterdam - Antwerp)

The ARA is well supplied, with some demand picking up, although the on-going maintenance at the Flushing refinery was still affecting high sulphur availability. 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 : $ 645
(1.0 %) :$ 698
180cst: $ 680
(1.0 %):$ 745
MGO 0.1%S: $970