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Today's Trends

Rotterdam (ARA) fuel oil - Trading $6 lower

Singapore fuel oil - Trading $3 lower

US Gulf - Expected to $5 lower

Oil prices decreased on Wednesday as unemployment went higher and the US oil inventory data came out higher than expected. Today the important figures are growth indicators from the service industry in the EU and US. Further, the ECB decision on interest rates and European GDP figures and retail sales could be of importance.

Oil prices rebound slightly this morning - following the mood of Asian financial markets.

US unemployment increases

The important ADP unemployment indicator came out showing that 169,000 people have been laid off during November. The reading was higher than the expected 155,000 - but also indicating layoffs slowed from October to November. The number came out in the mid region between the expected level and the last level. The higher than expected number indicates that Friday's unemployment figure will come out with a higher percentage unemployed than the anticipated 10.2%. Later today US jobless claims will be released - and in the recent readings, the number showed a lower amount of unemployment claims.

EIA data showed higher crude oil and gasoline inventories

Oil data from EIA came out Wednesday with major increases in the important crude and gasoline inventories. The increases were way higher than expected. Crude oil imports were lower, but as refinery utilization dropped against the expectations - the result was higher inventories. Gasoline inventories have increased as product demand has increased during last week, before the Thanksgiving Holiday. As refinery utilization drops below 80% once again, we finally see falling distillate inventories, which should be supportive for prices in the medium term. Refineries have run with higher than necessary utilization rates for too long and now there is too much product available.

Release: EIA oil data (Consensus)

Crude: 2,100,000 barrels (400,000)
Distillates: -1,200,000 barrels (-300,000)
Gasoline: 4,000,000 barrels (1,000,000)
Refinery utilization: -0.6% (0.5)

Recommendation

Prices are running back and forth in the 75-80 range. We are now on the middle of the range. Current short ranged recommendation is therefore pretty simple: buy on 75 - sell on 80.