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Trends

Rotterdam (ARA) fuel oil - Trading USD 8 higher

Singapore fuel oil - Trading USD 9 higher

US Gulf - Expected to open USD 3 lower

US data comes out mixed

Lower-than-expected housing starts in May discouraged the markets but the downside was mitigated by better-than-expected US industrial output data as investors took the latter as a more realistic signal of improving consumer demand and economic activity.

Euro trades lower on Spanish credit and banking system concerns

Another wave of sovereign debt concerns started rattling the markets as rumours about Spanish banks asking for EU loans hit the news. Although such rumours were denied by government officials later on in the day, Spanish government borrowing costs increased to a record high on worries about the country's economy and budget deficit.

Obama triumphant over BP executives

After meeting with President Obama, BP executives agreed to put 20 billion USD into an escrow account to meet all necessary oil spill clean-up costs in the future. BP also cut its dividend for the year. Future costs of offshore drilling are increasing with the agreement as oil companies will be reluctant to drill and insurance premiums on oil increases. This supported oil Wednesday.

Today's important numbers include US inflation, unemployment data (Jobless claims) and FED Business Index. The Europen Leaders Summit is also scheduled for today.

Recommendation

Oil increased on Wednesday without seeing the same tendency in the US stock market. This was due to a technical test of the $78.4 upper range 100 day moving average. Prices are currently caught in between 76.5 and 78.40 short term. As yesterday showed large resistance around the upper range, there should be buying opportunities in the coming days around 76.8 &ndash however be cautious of this strategy. If prices cross $78.4, then $79.2 is the next target (50 day moving average) and after that we are in a new uptrend.

Release: EIA oil data (Consensus)

EIA reported a surprise 1.7 million barrel build in crude inventories against an expected 1.2 million barrel draw. This surprise build started to weigh on the prices in early trading today, pulling Brent down from its two month highs of 78.40$.

* Crude: 1,700,000 barrels (-1,200,000)
* Distillates: 1,800,000 barrels (1,000,000)
* Gasoline: -700,000 barrels (200,000)
* Refinery utilization: -1.2 % (0.1)