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Oil slipped towards $111 a barrel on Tuesday as ample supplies outweighed worries over fighting between Israel and Palestinians in the Middle East.Concern over the well-being of Europe's economy also pressured oil and other commodities after ratings agency Moody's stripped France of its prized triple-A badge due to an uncertain fiscal and economic outlook. Brent crude was down 39 cents to $111.31 per barrel by 0925 GMT. US crude fell 42 cents to $88.86.

The down trend oil futures had shown since mid September has been halted for the time being by the conflict between Israel and Hamas. Quotations at ICE and NYMEX have breached some key resistance lines like the WTI crude's one at 87.85 dollars triggering more technical buying orders. The fear of Israel invading into the Gaza Strip and of neighbouring countries being drawn into the conflict sent the risk premium for oil futures higher yesterday as the fights had grown more intense. Elsewhere, in the USA the first round of budget talk was said to have been "very constructive". This did not only bolster equities but also oil markets, as US oil demand is likely to increase if the economy stabilises. The development of the euro and the better-than-expected US economic data published yesterday afternoon also supported oil futures. Focus was clearly on the conflict in the Gaza Strip, however. Along with the slightly bullish technical constellation and automatic short covering oil futures settled with considerable gains yesterday. The Brent and the WTI crude both marked a rise of some +2.3%.

ICE Gasoil contract for December delivery settled at 952.00 dollars on Monday. This was 31.50 dollars above Friday's settlement. With some 66,600 deals the traded volume was above average.

The stochastic indicator does not give any new signals this morning but remains bullish, even though it slowly approaches the overbought zone. After important resistance lines had been breached, more upward potential developed and automatic stop-loss orders were triggered yesterday. Given the following price rally, some of that upward potential caused by the stochastic indicator's buying signals has already been spent. The rise might prompt investors to take some profit. If the WTI crude exceeds yesterday's high of 89.80 dollars, however, this might renewedly trigger technical buying orders accelerating the upward correction, analysts say.

U.S.

Nymex Access bullish: Oil prices have traded in a narrow range in East-Asia and on Globex electronic trading platform this morning as neither the euro nor Asian equities have provided decisive clues up to now. However, Moody's downgrade of France might weigh on prices in the course of the morning. The traded volume is slightly below average. Market players now eye the performance of stock markets, new clues from forex trade and today's economic data. Moreover they will keep an eye on the development of the conflict in the Gaza Strip and the API's data, to be published tonight at 10.30 p.m..

Survey of US Petroleum inventories due out tonight at 22:30 (API) and Wednesday at 16:30 (DOE)
Forecast: Crude oil +0.6; distillates -0.4; gasoline +1.1 million barrels vs previous week

Houston (ex-wharf indications 19-11)
380cst $620
180cst $690
MGO $1055

New Orleans (ex-wharf indications 19-11)

380cst $630
180cst $718
MGO $1062

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

Crude is steady with WTI +$0.98. Singapore paper is slightly bullish, going up with +$2.25 for 180cst and +$1.25 for 380cst for Nov, and for Dec 180 cst +$2.25 and 380cst +$1.25 with MGO Nov contracts at +$1.80 and for Dec at +$1.80. The cargo market is up with 180cst +$4.99, 380cst +$5.56 and MGO +$1.28.

Market sentiment remains weak despite an improving cargo premium yesterday. The delivered bunker premiums softened to around +$4.0 above cargo prices. Bunker fuel oil swaps gained app.$12/mt at the front of the forward curve for Singapore papers. Backend was a few dollars stronger. This morning the markets are trading slightly lower.

High premiums for prompt deliveries.

380 cst $620
180 cst $630
MDO $930

ARA (Amsterdam - Rotterdam - Antwerp)

One supplier in Rotterdam continued to indicate operational delays of up to 48 hours at certain refineries for both LSFO and HSFO deliveries. Antwerp continued to run short of HSFO, so is expected that when received offers for prompt deliveries, there will be higher premiums. The HSFO is expected to stay firm as there is still no news on replenishment.

Indications for delivered bunkers:
380cst : $ 595
(1.0 %) :$ 626
180cst: $ 625
(1.0 %):$ 656
MGO 0.1%S: $ 950