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Technical indicators: neutral to bullish

After edging a bit higher in morning trading, oil prices shed their gains round noon. The WTI crude dropped below 91.00 dollars, to firm again well above this support. The spread between Brent crude and NYMEX crude front-month futures is increasing at a very lively rate, as the psychologically-important 100 dollar level fast approaches for the Brent. The Trans-Alaska pipeline, which carries around 630,000 barrels of oil a day from Alaska's North Slope, temporarily restarted at a lower-than-normal rate this morning.

Yesterday, oil futures kept rising in late NYMEX session and remained on their high level also in after-hour trading, supported by the stronger euro vs the dollar, a decrease in US wholesale inventories (a decrease is an indication of rising demand) and the shut-down of the Trans-Alaska pipeline.

ICE Gasoil January is expected to open 3.00 to 4.50 dollars up at about 798.25 dollars/ton after settling at 794.50 dollars (official settlement price) Tuesday night. This was 12.00 dollars above Monday's settlement. Volume with some 39,300 deals below average. The contract expires today. Therefore, the contract for February delivery is already much more traded.

Crude oil prices will receive some support from Alaskan pipeline closure and the expected production ramp-up by US refiners who had reduced their stocks at the end of last year for fiscal reasons. The wide spread between the brent and the WTI crude is also a bullish factor, as the spread will narrow, supporting the price for the WTI crude.

The short-term downtrend was eliminated yesterday when WTI crude breached the important 90.00 dollar resistance line. Oil prices are currently approaching the top of a medium-term ascending channel with a resistance at 94.65 dollars. As analysts expect the wide spread between the WTI and the brent to narrow, market momentum remains rather bullish. The Stochastic indicator is on its way up and the RSI shows that there is room for a price advance. Prices may rise as long as the reading is below 70, a level that signals a possible change in direction. The first support for the WTI crude is seen at 90.00 dollars today, the first resistance at 92.00 dollars.

U.S.

NYMEX flat: Oil prices are flat in Asian trading hours and electronic Globex trade this morning, taking their breath after Tuesday's rally. The WTI crude is holding above 91.00 dollars for a barrel. The traded volume is above average.

APIs: crude oil +0.057; distillates +1.554 ; gasoline +7.036 million barrels vs previous week. Refinery utilization -0.1%

DOEs: due out tonight

Forecasts: crude oil +0.2 ; distillates +0.2 ; gasoline +1.5 million barrels vs previous week.

Houston (ex-wharf indications 11/1)

380 cst $512
180 cst $533
MDO $764

Very tight avails for 180 cst

New Orleans (ex wharf indications 11/1)

380 cst $515
180 cst $536
MDO $768

Singapore (correct as of 1430hrs LT - delivered indications)

Crude is jumping up with WTI +$2.43. Singapore paper is continuing on its bullish track with Jan +$4.95 for 180 cst and +$3.70 for 380 cst, and for Feb 180 cst +$4.95 and 380cst +$4.96 with MGO Jan contracts at +$2.59 and for Feb at +$2.59. The cargo market is starting to react to crude and paper with 180cst +$5.12, 380cst +$5.48 and MGO +$1.71.

The Singapore fuel oil markets manage to move up more than $5.00/mt only during the Platts window yesterday. The current strong crude weakened the Asian crack spreads as fuel oil lags behind. The delivered bunker premiums hovered at more than $9.00 above cargo prices yesterday on robust demand and tight supply.

High premiums for prompt deliveries.

380 cst $537
180 cst $546
MDO $823

Fujairah (delivered indications 12/1)

380cst: $535
180cst: $573
MGO: $868

Rotterdam (delivered indications)

Yesterday, only barge trade deals of >2 KT reported in the MOC: 86KT was traded between 502.50-506.75 with Litasco as the main seller to Totsa as the main buyer.

The Asian arbitrage and buying interest in the ARA has kept the market bullish with loading delays on barges which were scheduled to load as far back as the 3-7th Jan. Loading delays are affecting as many as 14 barges and are subsequently causing tightness on the prompt HSFO requirements. Two VLCCS are currently loading on arb although the window has now closed for fresh fixtures with the premiums in the ARA as high as $4 despite the softening in VLCC rates. The LSFO is still sluggish, could prompt suppliers to opt for LSFO to meet the prompt HSFO demand. The LSFO markets are in reverse; high stocks and little demand, albeit rising now, dominate the pricing.

Indications for delivered bunkers:

380cst: $509
(1.0%): $524
180cst: $527
(1.0%): $538 (very low avails)
MGO 0.1%S: $804