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The oil market opened strong Wednesday morning after bullish API data were released the night before, boosting the euro in the morning. With the better than expected Ifo business climate index the common currency could continue its strong tendency of the last days, favouring an upward reaction at ICE and NYMEX by breaching first resistances. Prior to the release of the DoE oil inventories data in the afternoon, traders could take profits after techncial resistances at 110 dollars Brent and 88.65 dollars WTI proved to be strong. By and large, the Doe figures were bullish and boosted prices again. Thus strong resistances could be breached and more technical buying orders werea automatically triggered although there was again pressure on the euro while the U.S. dollar traded up. Particularly WTI's price jump was enormous. Due to the front month change yesterday, the U.S. benchmark was more volatile than all the other futures and thus more prone to fluctutations. In the late evening, the oil market consolidated at a high level and closed near yesterday's high at a low trade volume. The stochastic oscillator at ICE is still bullish this morning but already at the overbought level. The RSI is also at the overbought level for WTI and Brent which would favour profit-taking if buying signals were increasingly triggered. These are still missing at the moment but could be triggered in the course of the day if both benchmarks fell below the 70%-line again. Buying signal are also possible for the WTI stochastic. The indicator's lines are already converging and would trigger a bearish signal when they cross. As a result, the technical analysis is deemed less bullish this morning than yesterday. Since selling signals are a long time in the coming, traders take a rather neutral position at the moment.

ICE G.Oil contract for January delivery settled at 928.25 dollars on Wednesday. This was 8.75 dollars above Tuesday's settlement. With some 42,300 deals the traded volume was about average.

The stochastic oscillator at ICE and NYMEX remains rather bullish since the indicator's lines are not yet converging. But gradually, the stochastic shows an overbought situation, which would technically favour profit-taking when selling signals are triggered. From a technical perspective, such signals cannot be seen at the moment. Thus analysts expect prices to continue consolidating with a strong tendency. Short-term trend indicators point upwards but still leave some scope for profit-taking.

The euro erased yesterday's losses in late trade falling back below 1.32 dollar on a deterioration in US budget talks in the last 24 hours. According to officials, John Boehner’s (Republican) alternative proposal on taxes and spending risks pushing the US government past the deadline when automatic spending cuts and tax increases come into force. The Republicans say that the Democrats would be responsible for the most significant tax increases in the history of the USA at the beginning of 2013 if they don't agree to the deal suggested by Boehner. The Democrats, however, call for a more sustainable solution and criticise the Republicans' steady effort to find reasons against a compromise. Against this backdrop, market players' risk aversion has renewedly increased making the common currency decline despite the positive development in the euro zone. Lately, the ifo's better-than-expected German business climate index as well as the upgrade of Greece's credit ranking by Standard & Poor's had lifted investors' spirits. Today, market participants will focus on the development regarding the US-budget talks and the economic data that are due in the afternoon (US weekly unemployment data, GDP and other indicators).

In the first hours of European trade, the euro has slightly recovered testing its first resistances after its first support had remained strong.

Given yesterday's downward correction, the stochastic indicator has given a selling signal. As the euro is rather overbought, technical profit taking becomes more likely. Nevertheless, last night's downward correction has probably eased selling pressure already. The euro last sold at 1.3229 dollar. Supports are seen at 1,32 dollar, at 1,3190 dollar, at 1,3175 dollar, at 1,3155 dollar and at 1,3145 dollar. Resistances are at 1,3230 dollar, at 1,3255 dollar, at 1,3285 dollar and at 1,33 dollar.

German economic indicators:
• Producer price index November 1,4%. Forecast: 1,4%; previous month: 1,5%

U.S.

Nymex Access softer: With the softer euro and a stonger US dollar, and given the retreating Asian stock market (see Nikkei 225), market participants currently tend to cautious profit-taking at the oil market. Trading interest at ICE and NYMEX is about average for this time of day. Market pariticpants are waiting for the European market to open and for U.S. econmic data to be released today.

Survey of US natural gas storage volumes according to EIA: for the week till December 14: -75,0 bcf (billion cubic feet) vs the previous week.

US Petroleum inventories:
API: Crude oil -4.1; distillates -1.9; gasoline +4.2 million barrels vs previous week.
DOE: Crude oil -1.0; distillates -1.1; gasoline +2.2 million barrels vs previous week, refinery runs +1.1% and Cushing +0.1%.
Survey: Crude oil -0.9; distillates +0.9; gasoline +1.5 million barrels vs previous week.

With increased refinery runs, the demand for crude considerably rose as well. As a result, inventories decreased as expected. The draw in distillates was rather suprising although the API data released the night before indicated that inventories may decline more than expected in this category. Even though petroleum inventories increased, they decreased in the north of the USA, which is the most populous region. Petroleum as well as distillates fell to the lowest level on record for this season. Along with increased demand across the country (Petroleum: +0.130 million bpd, distillate +0.714 million bpd), it is clearly a bullish combination of factors which boosted oil prices yesterday.

Houston (ex-wharf indications 20-12)
380cst $615
180cst $663
MGO $1009

New Orleans (ex-wharf indications 20-12)
380cst $628
180cst $665
MO $1000

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

Crude is climbing again on the back of more positive news with WTI +$1.16 Singapore paper is following with +$1.75 for 180cst and +$1.60 for 380cst for Jan, and for Feb,180 cst +$1.75 and 380cst +$1.60. The cargo market is now turning with 180 cst +$2.29 380cst +$2.61 and MGO +$0.71.

High premiums for prompt deliveries.
380 cst $608
180 cst $618
MDO $935

ARA (Amsterdam - Rotterdam - Antwerp)

Northwest European bunker values firmed Wednesday on stronger FOB Rotterdam barges and crude oil prices,with support coming from the market’s optimism surrounding the potential ‘Fiscal Cliff’ situation in the US. Some bunker sources reported busy trading activity in Hamburg, Gothenburg and Great Belt. However, a few bunker sources indicated weak liquidity levels. Buyers have now met their requirments for the rest of the month, or hoping that the market will finally drop. Most the ports in NWE experienced difficulties with prompt deliveries due to existing or expected barge tightness. Some bunker suppliers noted that loading terminals were expected to operate for only few days due to holidays and had restricted fuel volumes on the loading side as well, sources said. Rotterdam continued to experience difficulties with low sulfur fuel oil availabilities.

Indications for delivered bunkers:
380cst : $ 582
(1.0 %) :$ 613
180cst: $ 618
(1.0 %):$ 649
MGO 0.1%S: $ 940