Crude-oil futures prices were down for a third day Wednesday, ahead of U.S. weekly oil inventory data and expected signals from the Federal Reserve on a timetable for scaling back its massive economic stimulus program.Data from the Federal Energy Information Administration, due at 10:30 a.m. EDT, is expected to show crude oil stockpiles, now at seven-month lows, fell for the seventh time in the past eight weeks. But the inventory drop is expected to be offset somewhat by slower refinery operations, a signal that crude-oil demand will be declining as seasonal maintenance at plants begins. The inventory figures may be overshadowed by the release at 2 p.m. EDT of the minutes of the Fed's last policy board meeting, which is expected to give clarity on when the planned tapering of the stimulus program will begin. Concerns already are rippling through emerging markets that the end of the incentives will cause dollar-based crude oil prices to rise in local currency terms, choking off the strong growth in India and elsewhere that has fueled the rise in global oil consumption in recent years.Continued strikes in Libya that are disrupting oil production and exports, civil unrest in Egypt and disruptions of Iraqi oil exports are keeping prices from dropping further, traders said. Despite the upheaval in Egypt, operations remain normal at the Suez Canal and the Sumed pipeline, which together carry some 4.5 million barrels a day of crude oil and refined products from the Gulf to the Mediterranean. October-delivery light, sweet crude oil on the New York Mercantile Exchange was 11 cents lower, at $105 a barrel. ICE North Sea Brent crude oil for October was 32 cents lower, at $109.83 a barrel.
In view of the bearish technical constellation and the bullish fundamental situation, we had already expected Tuesday’s session to be rather volatile. Oil prices initially followed the bearish technical signals, which favoured some profit-taking in the morning. Unrest in Egypt and Libya as well as the stronger euro, however, limited oil’s downside and thus, downward potential was quickly used up already. In the afternoon, oil prices consolidated above their day’s highs but were not able to breach them again at this point. Only with fresh news from Libya, reporting another conflict with protesters at an export terminal did the oil market trade up again, breaching several resistances. WTI, however, did not advance as considerable as the other contracts as the tensions in the Middle East do not have an equally strong impact on it. In late trade, investors again took enormous gains ahead of WT’s front month change. Consequently, the American crude fell to its day’s low whereas ICE contracts closed with gains. In this phase, the price spread between the two crude benchmarks had widened to 5 USD again.
ICE Gasoil contract for September delivery settled at 938.75 USD on Tuesday. This was 3.50 USD below Monday's settlement. With some 50,800 deals the traded volume was only slightly below average.
After giving off selling signals at all charts, the Stochastic remains bearish this morning. The RSI has further advance into the overbought territory. But it will only give off a selling signal if it falls below the 70%-line. After the short downturn yesterday morning, oil futures seem to have already used up their short-term downward potential that had arisen after the Stochastic’s selling signal. But as the indicator is still bearish, we assume a bearish to neutral stance this morning. If the RSI gave off a selling signal in the course of the day, downward pressure would increase again.
U.S.
Nymex neutral: After rising again in late trade yesterday, oil futures at ICE and NYMEX have been edging lower in early Asian trading this morning. Particularly WTI shows a much weaker tendency than the Brent contracts as it is less affected by the situation in Libya and Egypt. The traded volume at NYMEX is about average for this time of day. Market players are now waiting for European markets to open, for new signals from forex trading as well as for today’s economic indicators, especially the DoE data. They will also continue to closely eye developments in Libya and Egypt.
At higher refinery runs, crude and gasoline stocks in the USA decreased while distillate inventories rose. The API's figures for the week ended 9th of August in detail:
The fact that refineries ramped up their production capacities in the reported week came as surprise since analysts rather expect refinery runs to drop in the weeks to come. Crude stockpiles declined about as much as expected and the draw was mainly registered in Cushing, Oklahoma. Despite higher production output, gasoline reserves fell much more than presumed which could hint at increased demand at the end of summer driving season. As for distillates, supply remains comfortable as stockpiles rose more than expected.
While higher refinery demand and dropping gasoline stocks are considered as slightly bullish, the change in crude stocks is rather neutral. At the end of the summer, distillates play a more important role again and thus the build is considered bearish for prices. On the whole, the API data have not had a sustainable effect on the oil market and are seen rather neutral.
Houston (ex-wharf indications 20-08)
380cst $605
180cst $679
MGO $1016
New Orleans (ex-wharf indications 20-08)
380cst $609
180cst $657
MGO $1017
Singapore
Crude is slighty bearish, with WTI -$1.28. Singapore paper is bullish with +$1.00 for 180cst and +$1.25 for 380cst for Sep, and for Oct 180 cst +$1.00 and 380cst +$1.25 with MGO contracts Sep -$0.11 and Oct -$0.12. The cargo market is bearish, losing with 180cst -$7.73, 380cst -$7.28 and MGO -$1.33.
The Singapore fuel oil markets fell more than $7.0 during the Asian Platts window yesterday. Market remained weak and saw strong selling pressure on the window which weakened the Asian fuel oil crack. The delivered bunker premiums were around $5.0 above cargo prices yesterday. This morning the markets are trading a few dollars down.
380cst $608
180cst $611
MGO $920
Fujairah (delivered indications 21-08)
380cst $610
180cst $665
MGO $985
ARA (Amsterdam - Rotterdam - Antwerp)
Due to the availability problems with hsfo ( long waiting time at refineries, only contracts with some ex wharf suppliers, less spot available at higher premiums) the spread between hsfo and lsfo is minimum. In September ESSO Antwerp will have even more avail problems as they are working on maintenance of their refinery. Because of this, local Antwerp suppliers will need to buy more product in Rotterdam, therefor long waitinglines at Rotterdam refineries and storage are to be expected, with premiums on price as a result.
Indications for delivered bunkers:
380cst : $596
(1.0 %) :$616
180cst: $626
(1.0 %):$ 646
MGO 0.1%S: $ 920
