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Brent crude rallied above $108 a barrel on Friday after posting its biggest daily percentage drop in six months in the previous session, although expectations for a rise in Libyan supply and speculation of a build-up in U.S. stockpiles capped gains. By 0930 GMT Brent had risen 53 cents to $108.31, rebounding from a 2.7 percent drop on Thursday, the largest decline since late June. U.S. crude was unchanged at $95.44 after earlier touching a one-month low of $95.13. On Thursday, the contract posted its biggest daily fall since November 2012.

The traded volumes at oil markets were still rather low at oil markets on Thursday morning. Quotations stayed in a relatively narrow range in the first half of the day. The bearish impact of the builds in US product stocks and the bullish note of the draw in US crude oil inventories (API) were rather balanced at that time. However, selling pressure significantly increased just after midday particularly sending product futures lower. Investors took some profits after reports from Libya saying that some of the country's oil installations had been restarted. Moreover, the builds in US product inventories reported by the API as well as the retreating euro provided bearish cues. A stronger greenback (vs the euro) makes dollar-denominated oil more expensive, that is less attractive, to investors outside the USA. The break below several supports frequently triggered new technical selling orders and market participants slowly began to bet on a further downward move. Oil futures' decline continued until late in the evening and so quotations at ICE and NYMEX settled with new losses. This leaves more downward potential for domestic prices this morning.

ICE Gasoil contract for January delivery settled at 923.50 USD on Thursday. This was 20.75 USD below Tuesday's settlement. With some 40,900 deals the traded volume was below average.

After yesterday's sharp decline at oil markets the technical indicators move in oversold territory this morning but don't give any new cues to market participants. Neither the stochastic indicator, nor the RSI currently seem to point to any important signals which is why we assess the technical constellation as neutral this morning. At ICE, more technical selling pressure is only to be expected should futures fall below yesterday's lows. If the supports these lows have formed remain strong, however, investors are more likely to cover their short positions which would slightly bolster prices.

U.S.

Nymex neutral: Oil futures are still trading near yesterday's lows in Asian trading this morning. The traded NYMEX volume is on average for this time of day. Investors are now eying the opening of stock markets waiting also for new cues from forex markets as well as from today's economic indicators. Today, there focus will also be on the DOE's data on US oil inventories.

Survey: Crude oil -2.2; distillates +0.8; gasoline +1.1 million barrels vs previous week.
API: Crude oil -5.7; distillates +2.6; gasoline +3.3 million barrels vs previous week.
DOE: Due out tonight.

Houston (ex-wharf indications 31-12)
380cst $608
180cst $671
MGO $1005
New Orleans (ex-wharf indications 31-12)
380cst $621
180cst $659
MGO $1008

Singapore

WTI is bearish still with -$3.25. Singapore paper is losing with -$7.25 for 180cst and -$8.20 for 380cst for Jan, and for Feb 180 cst -$8.25 and 380cst -$9.50 with MGO contracts Jan -$2.90 and Feb -$2.62. The cargo market is bearish too with 180 cst -$4.74, 380cst -$4.16 and MGO -$0.40.

The Singapore fuel oil markets lost more than $4.0 during the Asian Platts window on the first trading day of the New Year. Fresh Singapore heavy residual stockpile, reported as of 2nd January, saw a massive draw of -1.63 mbbl to 19.05 mbbl which indicated firmer fundamentals. The delivered bunker premiums inched up app. +$5.5 to +$6.5 above cargo prices. This morning markets are trading slightly higher.

380cst $604
180cst $611
MGO $910

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $578
(1.0 %) : $598
180cst: $608
MGO 0.1%S: $ 900