---

Brent crude oil futures fell more than 1% in Friday morning trade, losing 40 cents in five minutes at one point before recovering some of the lost ground. Thursday saw gains in the Brent price of over 1%, with some commentators attributing the rise to news that Saudi Arabia made production cuts in December of 900,000 barrels a day below the June 2012 peak. At 1058 GMT, the front-month February Brent contract on London's ICE futures exchange is down 97 cents at $110.92 a barrel. The front-month February light, sweet crude contract on the New York Mercantile Exchange is trading 44 cents lower at $93.38 a barrel. On Thursday, oil futures started with a strong tendency at the opening of European trading. At night, China had released its trade balance, showing an enormous surplus. This lifted traders sentiment and increased risk-taking. Oil prices at ICE and NYMEX, along with the strong euro, had already breached first resistances in the morning, automatically triggering technical buying orders. The price rise was accelerated by news out of Saudi-Arabia, stating that the kingdom had cut its production by 5% after the last OPEC meeting held in December. It has been the most drastic cut in Saudi oil production in over 3 years and helped WTI to rise to a four-month high. Brent had also reached its highest level since October last year. Upside was limited at 966.00 dollars G.Oil. At this level, profit-taking set in a technically overbought market. The worse-than-expected U.S. economic data also weighed on prices at NYMEX floor trading. The bearish market sentiment became stronger at night after China had released an unexpectedly high inflation rate. While futures at ICE fell back to their supports, WTI stayed strong, once again reducing the Brent-WTI spread.

ICE Gasoil contract for February delivery settled at 959.25 dollars on Thursday. This was 10.50 dollars above Wednesday's settlement. With some 149,200 deals the traded volume was well above average.

The stochastic oscillator displayed an overbought market situation yesterday. This morning, the indicator is neutral for WTI but already slightly bearish for Brent and G.Oil as both their lines have crossed. In contrast, the RSI is still rather neutral. The stochastic is already touching the 70%-line of WTI, which means that technical selling orders could be triggered if the line was breached. Oil futures are still slightly overbought, which indicates more downward potential. However, the intermediate support lines are still strong and much of the bearish potential has already been exploited after yesterday's strong downward reaction.

U.S.

Nymex Access bullish: With China reporting that its inflation rate continues to rise, oil prices traded with a soft tendency in Asia this morning. But futures bounced off their first resistance and are slightly trading up again after technical buying orders had been triggered. Trading interest at NYMEX is slightly below average for this time of day. Market participants are waiting for the European market to open, for the development of the euro and a few economic data out of the USA.

Houston (ex-wharf indications 10-01)
380cst $639
180cst $688
MGO $1025

New Orleans (ex-wharf indications 10-01)
380cst $654
180cst $699
MGO $1019

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

WTI is stable still with +$0.12. Paper for Jan are bearish, dropping with 180cst -$4.20 and for 380cst -$4.80 , Feb contracts are dropping as well with 180cst -$3.75, 380st -$3.80. The cargo market is starting to react to crude and paper with 180cst +$5.74, 380cst +$6.74 and MGO +$0.67.

The Singapore fuel oil market prices increased more than $5.5 during the Platts window yesterday. The Asian Fuel Oil cracks firmed yesterday as strong buying continued to support cracks. The delivered bunker premiums maintained between $4.5-6.5 above cargo prices. This morning the markets are trading lower.

High premiums for prompt deliveries.
380 cst $634
180 cst $640
MDO $950

ARA (Amsterdam - Rotterdam - Antwerp)

There were a few suppliers who were unable to supply for prompt deliveries due to busy schedules earlier this week. The port of Rotterdam was experiencing difficulties with LSFO for prompt deliveries due to operational delays. Due to the tightness of LSFO in Antwerp the premiums are expected to be higher.

Indications for delivered bunkers:
380cst : $ 620
(1.0 %) :$ 650
180cst: $ 650
(1.0 %):$ 680
MGO 0.1%S: $ 950