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U.S. crude futures fell to nearly $88 per barrel in early Asian trading on Wednesday, reversing a U.S. election day rally in oil prices as investors waited for voting returns in the world's biggest economy.

Like on Monday, oil futures at ICE and NYMEX have edged slightly lower on Tuesday morning. Trade was renewedly subdued as investors remained cautious ahead of the presidential elections in the USA. In the course of the afternoon quotations more and more tested their upward potential. This development was favored by the stronger stock markets in Europe and the USA but also by the softer dollar. However, analysts did not see any fundamental factors that might have justified the price rally at ICE and NYMEX in the evening. Tim Evans of Citi Futures and Gene McGillian presume that investors have taken some profits from their short positions (short covering) but also that they have speculated on bullish US oil inventories data. Oil futures have breached several resistance lines triggering more technical buying orders that accelerated the rise. The WTI crude temporarily marked a gain of +4.1% compared to its price at the opening of the session. The Brent gained some +3.9% and the Gasoil +2.3%. The API's data, published at 10.30 p.m., have taken investors by surprise. Instead of the expected draw in product stocks, they have shown slight builds in that category. However, the data have not had any sustainable impact on oil futures for the time being. Thus, quotations settled near their highs yesterday. There have not been any fundamental factors that might have caused yesterday evening's price rally. Some market participants hope that reconstruction works in the Northeast of the USA will bring some supportive clues. As damages done by winds and floodings are repaired, the building sector might benefit - and boost demand for distillates as machines need to be fuelled. This is one theory. On the other hand, the API's data indicate that hurricane Sandy has a rather bearish impact on oil reserves, as the dents in demand and bottlenecks in availability has made fuel stocks increase. This effect seems to be graver than refineries' production losses.

ICE Gasoil contract for November delivery settled at 937,00 dollars on Tuesday. This was 14.50 dollars above Monday's settlement. With some 43,100 deals the traded volume was below average.

This morning, the stochastic indicates both at ICE and NYMEX that oil prices will continue to rise. Analysts remain cautious, though, pointing to the fundamental data that might have an impact on oil markets today, namely the DOE's data and the reactions to the re-election of Barack Obama as US President. Technically, oil markets remain bullish, as the lines of the stochastic indicator have crossed - even though yesterday's sharp rise has already spent some of the upward potential. There might also be some profit taking from long positions.

U.S.

Nymex Access bullish: Oil prices have traded sideways in East-Asia and on Globex electronic trading platform this morning after yesterday's sharp rise. The traded volume is far above average. Investors now eye the reaction of stock markets on the re-election of Barack Obama and new clues from forex trade. Moreover they are looking ahead to some economic indicators and the DOE's data on oil inventories (published at 4.30 p.m.).

API: Crude Oil +0.0; distillates +0.2; gasoline +1.4 million barrels vs previous week
DOE: Due out tonight
Survey: Crude Oil +1.7; distillates -1.6; gasoline -1.3 million barrels vs previous week

Houston (ex-wharf indications 06-11)

380cst $603
180cst $708
MGO $1005

Very tight avails for 180 cst

New Orleans (ex-wharf indications 06-11)

380cst $610
180cst $703
MGO $1015

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

Crude is gaining on the back of positive economic news with WTI +$2.67. Singapore paper is very bullish, gaining with +$17.85 for 180cst and +$16.00 for 380cst for Nov, and for Dec 180 cst +$18.95 and 380cst +$18.50 with MGO Nov contracts at +$2.63 and for Dec at +$2.90. The cargo market is catching up, however, with 180cst +$5.28, 380cst +$2.32 and MGO +$1.48.

The Singapore fuel oil markets were only up $2.0- 5.5 during the Platts window yesterday. The Asian fuel oil crack weakened significantly during the window with strong selling interest. The delivered bunker premiums were around $4.0-5.0 above cargo prices. Bunker fuel oil swaps gained app.$14/mt at the front and a dollar more at the backend of the forward curve for Singapore papers. This morning the markets continue trading up.

High premiums for prompt deliveries.
380 cst $615
180 cst $625
MDO $930

ARA (Amsterdam - Rotterdam - Antwerp)

Although there are still a lot of waiting times at the loadinginstallations for HSFO, the avails for HSFO and LSFO are good.

Indications for delivered bunkers:

380cst : $ 594
(1.0 %) :$ 630
180cst: $ 624
(1.0 %):$ 660
MGO 0.1%S: $ 940