Along with the retreating euro, oil prices edged lower in the first hours of European on Wednesday. Doubts about whether the "Greek accord" would be a final solution for the country's financial problems have weighed on the common currency, simultaneously bolstering the dollar. The bearish technical constellation put even more pressure on oil futures after first supports had been breached and so quotations at ICE and NYMEX declined until the afternoon. As breaking news regarding the conflict in the Near East were lacking, investors refocussed on the state of the economy. Therefore, after the opening of NYMEX floor trade, expectations of builds in US oil inventories (after the API's bearish report released Tuesday night) and the disappointing figures regarding new home sales continued to pressure oil prices. The unexpected draw in crude oil and distillate stocks the DOE's report showed was only modest, but even so, they slightly supported oil futures shortly after the release of the data. In late trade, hopes on an agreement over the US budget ahead of Christmas also buoyed futures and so oil prices have pulled back from their lows. The stochastic indicator is still bearish at ICE charts, whereas, with the decline of prices during the past two days, most of the downward potential has already been spent. This is also reflected by the fact that the lines of the indicator already converge again. For the WTI crude there are no clear signals anymore this morning and the RSI is also in a neutral zone. New downward slack has developed after mid-term supports had been breached at the beginning of the week. Meanwhile prices are approaching their long-term supports. At ICE they have already dropped below the lows they marked the day before, which also indicates that the decline will continue. After the hefty losses of the past two days, oil prices are likely to mark a slight upward correction this morning, however. Larger buying orders are only expected, however, if the WTI crude rises above 87.34 dollars or if the Brent exceeds 110.17 dollars. Therefore, technical analysts rather assess the situation as neutral this morning. Oil futures at ICE and NYMEX have tested their upward potential in the morning bolstered by a technical upward correction as well as by growing optimism that the US government might soon find a solution in the current budget talks to avoid the looming fiscal cliff.
ICE Gasoil contract for December delivery settled at 932.00 dollars on Wednesday. This was 8.25 dollars below Tuesday's settlement. With some 41,000 deals the traded volume was below average.
Investors' focus has shifted from the geopolitical situation to the economic state. Thus overproduction and rising oil inventories play are considered again, as well as the forecasts regarding the oil demand of industrialised nations. US and Chinese economic data and the development of the US budget talks become increasingly important. Market participants will keep an eye on the situation in the Near East and in Egypt, however. If the conflict escalates, prices would be bolstered again.
The positive sentiment was also reflected in the course of the euro and on stock markets. While the ICE Brent has exceeded its resistance at 110.20 dollars, the WTI's first resistance has limited gains. The euro dropped below its 1,29 dollar mark on Wednesday morning as disenchantment set in after the initially positive reaction to the agreement on a Greek bailout. Renewed hopes for a quick solution in the US fiscal cliff talks the single currency back up today. On Wednesday U.S. president Barrack Obama said that the two political parties can agree on a framework for a budget deal to prevent automatic tax increases and spending cuts from coming into effect in January. “My hope is to get this done before Christmas,” according to Obama. Risk appetite rose on the comments, weighing on the safe-haven dollar and supporting the euro that is also lifted by a strong rise in Asian equities. Still, Greece worries have not yet fully subsided and so the euro faces more downside risk. The Stochastic oscillator at the euro chart is still bearish at the overbought level. The RSI still lingers above the 70% line. Should the line be breached a fresh selling signal would be triggered. The euro last sold at 1.2976 dollars down from 1,2939 dollars Wednesday night. Supports are seen at 1,2935 dollars, at 1,2910 dollars, at 1,2900 dollars, at 1,2880 dollars and at 1,2830 dollars today. Resistances are at 1,2960 dollars, at 1,3000 dollars, at 1,3010 dollars and at 1,3030 dollars.
• Consumer confidence November -27,0. Forecast: -27,0; previous month: -25,7
• Business and consumer sentiment index November 85,7. Forecast: 84,2; previous month: 84,3
U.S.
Nymex Access bullish: Unlike the figures the API published last night, the DOE's oil inventories have initially shown a rather bullish impact on the markets. According to its latest report, refinery run rates have increased during the past week.
Survey of US natural gas storage volumes: for the week till November 23: -8,0 bcf (billion cubic feet) vs the previous week.
Stock reports:
Crude oil + 0.9; distillates +0.2; gaoline +1.2 million barrels vs previous week.
APIs: +2.0; distillates +0.3; gaoline +2.3 million barrels vs previous week with refinery runs +1.4%.
DOEs: +0.3; distillates -0.8; gaoline +3.9 million barrels vs previous week with refinery runs +0.7%.
According to the DOE's report, refinery utilisation has increased in the past week. This had already been expected, as production has more and more got back to normal after hurricane Sandy. Crude oil stocks have thus - unlike in the API's report - moderately retreated and are on the lowest level in November. Given the continuing overproduction and a backlog of stocks, this is only seen as slightly bullish, however. Distillate inventories have also unexpectedly retreated. The decline in gasoline and distillate demand (gasoline: -0.471 mbpd; distillates: -0.364 mbpd) are a rather bearish component. The bearish effect of the massive builds in crude gasoline stocks has been largely offset, as the winter is approaching. Thus oil futures at ICE and NYMEX have trimmed their losses shortly after the release of the data.
Houston (ex-wharf indications 29-11)
380cst $610
180cst $676
MGO $1015
New Orleans (ex-wharf indications 29-11)
380cst $622
180cst $657
MGO $1020
Singapore (correct as of 1430hrs LT - delivered indications)
WTI is now changing direction with it slowing in its losses -$0.08. Paper continued down for Dec 180cst -$10.00 and for 380cst -$9.30 and MGO -$0.15, Jan contracts were trading with 180cst -$8.25, 380st -$9.30 and MGO -$0.15. The cargo market is has now adopted paper's bearishness with 180cst -$9.05, 380cst -$9.07 and MGO -$1.42.
The Singapore markets plummeted around $9.0 during the morning Platts window yesterday. The delivered bunker premiums remained around $3.0 above cargo prices as the lower outright prices also attracted some demands. There were no significant changes to the market fundamentals as strong supply coupled with relatively soft demands.
High premiums for prompt deliveries.
380 cst $599
180 cst $609
MDO $923
Fujairah (delivered indications 29-11)
380cst $600
180cst $620
MGO $1020
ARA (Amsterdam - Rotterdam - Antwerp)
Demand is very weak in Rotterdam currrently with Antwerp mirroring it with owners still emploing a wait and see approach in the hope for further softening. Antwerp continued to see restrained availability for high sulfur fuel oil on prompt inquiries due to ongoing shortages of cutter stocks with a resupply only expected on the 1st Dec at the earliest meaning things will continue VERY tight on HSFO in both Antwerp and Flushing with little to none available.
Indications for delivered bunkers:
380cst : $ 585
(1.0 %) :$ 610
180cst: $ 618
(1.0 %):$ 643
MGO 0.1%S: $ 932
