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Oil prices fell this morning as a rise in U.S. inventories added to a deep global glut, while investors discounted any possibility of the Organization of the Petroleum Exporting Countries (OPEC) would do anything to cut production at this week's meeting.

Oil futures edged lower on Tuesday morning as market fundamentals and the technical constellation remained slightly bearish. Prices had already slipped below their corrective uptrends on Friday. Monday's losses then generated fresh downward potential. After investors had covered some of their short positions on Tuesday morning, oil futures lost more and more ground in the course of the day. Prices dropped below Monday's lows triggering another technical sell-off. Gasoil fell down to the psychologically important support at 400.00 USD in the afternoon. However, this support limited losses. Brent tested its supports at 44.15 and 44.00 USD, whereas WTI stopped short of the 41.20 USD mark. The Saudi oil minister comments temporarily buoyed oil prices but since he didn't provide any crucial news this effect didn't last for long. The expectations of a draw in nationwide US crude oil inventories were bullish for oil markets. Futures were also fostered by the sharp rise in the NYMEX Gasoline price which had been caused by the introduction of a new quota for the share of bio-fuels in US gasoline. Late in the afternoon and in the evening oil futures held steady above the supports they had tested when hitting new lows. The bearish data on US oil inventories released by the API at 10.30 p.m. failed to generate fresh downward potential. Oil futures at ICE thus ended the day with considerable losses, whereas NYMEX futures lost less ground against the backdrop of the strength of the NYMEX Gasoline contract.

ICE Gasoil contract for December delivery settled at 402.75 USD on Tuesday, this is -16.75 USD below Monday's settlement. With some 62,300 deals the traded volume (front month) was above average.

Oil futures at ICE and NYMEX have moved in a short-term downtrend over the past few days. However, the technical selling signals which had been given off by the Stochastic indicator have largely been priced in by now. So far, fresh cues are lacking which is why the technical selling pressure has considerably diminished. The short-term downtrends might usher oil prices to fresh lows but since there are no new technical selling signals yet, we are assessing the technical constellation as neutral for the time being. The situation will only turn slightly bearish if oil prices sustainably drop below Tuesday's lows.

U.S.

Nymex is above average: Oil futures consolidated above Tuesday's lows in East-Asia and in electronic Globex trade early this morning as market players still hadn't digested the API's data on US oil inventories. Since short-term supports remained strong and the euro regained some ground, oil prices have just edged higher. The traded volume at NYMEX is slightly above average this morning. Investors are waiting for the European financial and forex markets to open today and for the release of some important indicators out of the Eurozone and the USA. Moreover, they will eye the release of the DOE's report on US oil inventories.

Forecast: Crude oil -0.3; Distillates +0.1; Gasoline +1.0 million barrels vs previous week.
API: Crude oil +1.6; Distillates +2.7; Gasoline +0.9 million barrels vs previous week.

Houston (ex-wharf indications 2-12)
380cst $201
180cst $285
MGO $442

New Orleans (ex-wharf indications 2-12)
380cst $209
180cst $263
MGO $436

Singapore (delivered indications 2-12)

Brent is down with -$0.43 for December contracts. Singapore paper is down with -$2.25 for 180cst with -$3.25 for 380cst for Dec, and for Jan 180 cst -$2.25 and 380cst with -$2.90 with MGO contracts Dec with -$0.56 and in Jan with -$0.52.The cargo market is bearish with 180cst +$2.19, 380cst with +$3.47 and MGO with -$0.78.

380cst $215
180cst $230
MGO $410

Fujairah (delivered indications 2-12)

380cst $213
180cst $252
MGO $605

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : 189
MGO 0.1%S: $363