Oil futures have tested their upward potential this morning. ICE G.Oil has breached its first resistance at 890.50 dollars, Brent and the WTI Crude have approached their resistances. Gaining equities and a slightly weakening dollar have supported oil prices. Currently oil futures pull back from their highs. Investors look ahead to the opening of US markets in the afternoon.
The oil complex edged higher Friday morning in a counteraction to Thursday evening's slide. Market participants liquidated short positions, supporting oil prices in Londonand New York. The WTI Crude's resistance at 94.95 dollars was briefly breached in the course of the afternoon. After resistances at 901.50 dollars for the ICE Gasoil and at 104.50 dollars for the Brent proved strong, however, there was no possibility for further upward potential. In the evening, investors at the financial market took some profit and liquidated their long positions ahead of the weekend. This put some selling pressure on oil futures and made them breach first short-term supports. Automatically triggered technical selling made oil prices drop down to strong supports, that limit the current downward leeway.
OPEC presented its Wednesday agreement as a decision to keep output flat, but recent production data suggests the deal could result in a near-term supply cut. OPEC agreed to limit its oil production to 30 million barrels a day, which is close to where most market analysts see the average demand for its crude in 2012. However, recent revelations about higher-than-expected oil production in Saudi Arabiaand Libyasuggest that 30 million barrels a day may be significantly below current OPEC oil production. The cartel produced 30.37 million barrels a day of oil in November, however, this does not reflect recent increases in production. Saudi Oil Minister Ali Naimi said his country actually produced 10.05 million barrels a day of oil in November, 450,000 barrels a day above the official OPEC figure. According to OPEC Secretary General Abdullah Salem El-Badri, Libyais now producing 1 million barrels of oil a day, 430,000 barrels a day above the OPEC estimate for November. If these production levels were to continue to the end of the year, total OPEC production could be running 1.25 million barrels a day above the new production ceiling when it comes into force in January. But if OPEC members move swiftly to follow the deal, that could leave markets short. The International Energy Agency, which represents major energy-consuming rich countries, also expressed concern about the short-term effect of the new output ceiling should there be a prompt cutback.
ICE Gasoil contract for January delivery settled at 894.25 dollars on Friday. This was 4.00 dollars below Thursday's settlement. With some 50,300 contracts the traded volume was about on average.
The Stochastic oscillators at the NYMEX and ICE charts remain bearish, but are at a strongly oversold level. Oil futures are likely to remain soft in the course of the day, testing their downward potential. Technical analysts currently don't expect any significant correction up. Those supports that proved strong in the past few days are, however, likely to limit the downward potential. We thus expect a consolidation with a soft tendency in the course of the day.
U.S.
Nymex acces losing. Oil futures are edging lower in East Asiaand on Globex electronic trading platform this morning. Market participants are taking some profit at ICE and NYMEX after the euro's losses respectively the slightly advancing dollar. The traded volume is slightly above average. Investors look ahead to the opening of European markets and impetus that might be provided by foreign exchange.
Houston (ex-wharf indications 16-12)
380cst $618
180cst $656
MGO $944
Very tight avails for 180 cst
New Orleans (ex-wharf indications 16-12)
380cst $621
180cst $659
MGO $947
Singapore (correct as of 1430hrs LT - delivered indications)
Crude is slowing, but losing still with WTI -$0.67. Singapore paper is easing as well with -$2.50 for 180cst and -$2.25 for 380cst for Jan, and for Feb 180 cst -$2.20 and 380cst -$2.00 with MGO Jan contracts at -$1.10 and for Feb -$1.35. The cargo market is in line with Crude and Paper, easing with 180cst -$8.15, 380cst -$4.53 and MGO -$1.40.
The Singapore heavy residual inventory reported a slight draw of -0.15 mbbl to 17.03 mbbl; which is still considered lower than the average of 19.6 mbbl. The delivered bunker premiums remain around $23.0 last Friday. Bunker fuel swaps closed the week with slight gains at the front of the forward curve and up to $4/mt losses at the backend both for Rotterdam3.5% fob barges and Singapore 380cst papers. This morning markets are trading higher.
High premiums for prompt deliveries.
380 cst $647
180 cst $665
MGO $915
ARA (Amsterdam - Rotterdam - Antwerp)
Despite lower day-on-day outright Brent crude prices Friday, 3.5% FOBRotterdambarges traded relatively unchanged from Thursday levels prompting suppliers in Northwest Europeto hold their offers largely flat. Trading activity in the main NWE bunker hubs was supported as some shipowners keen to stem their deals on competitive offers and some expectations that bunker levels could firm on barge tightness towards the Christmas holidays. Suppliers report some bullish sentiment for bunker deliveries at the end of next week. High and low sulfur fuel oil tightness in Rotterdamand Antwerpcontinued to cause congestion at loading installations. Strong winds in the North Sea and off the west coast of France caused some delays for vessels going to ARA.
Rotterdam
Indications for delivered bunkers:
380cst : $ 602
(1.0 %) :$ 651
180cst: $ 621
(1.0 %):$ 669
MGO 0.1%S: $900
