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Crude extended its decline after the biggest drop in two months on speculation that a slowing U.S. economy may curb fuel demand. Oil for October delivery fell as much as 64 cents to $95.98 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.05 at 3:30 p.m. Singapore time. The contract slid $2.38 yesterday to $96.62, the lowest close since Sept. 10. Prices are 2.8% lower this year.

After last week's rise oil futures have traded higher in New York and London on Monday morning, sticking to their high level until the afternoon. Since breaking news was lacking, oil futures have tested their supports and resistances but have not been able to breach them. Gains have been capped by the resistance lines at 1,013.50 dollar for the gasoil and at 117.00 dollars for the Brent; downward slack has been limited at 1,007.50 dollars Gasoil and 116.00 dollars for the Brent. The US New York Empire State Index came out worse than expected in the afternoon but did not have any sustainable impact on oil markets. Despite the clearly overbought market, analysts of Commerzbank and Energy Management Institute claimed that there was more upward potential in the afternoon given the expansive measures of the European and the US central banks and the unrests in the Middle East. During late evening trade this proved wrong, however. After investors took some profit from their long positions oil futures plummeted within only a few minutes. The traded volume increased significantly at that time and there were massive stop loss selling orders. Brokers tried to find the cause for this slide but there were no clues. At last, the drop was widely regarded as a technical chain reaction. Oil futures have been unable to pare these losses and so they settled considerably lower.

OPEC: Global oil demand is poised to be depressed for the next 18 months while supply levels from OPEC countries are at fairly comfortable levels, the West's energy agency the IEA said. The IEA said it made no significant changes to its global oil demand outlook and forecast demand would grow at a steady rate of around 0.8 million barrels per day (bpd) or 0.9% in both 2012 and 2013. Some analysts said the oil demand outlook would probably be marked down by the IEA in the future.

ICE Gasoil contract for October delivery settled at 1,010.50 dollars on Monday. This was 3.00 dollars below Friday's settlement. With some 79,500 contracts the traded volume was well above average.

The stochastic indicator gives a selling signal at ICE and NYMEX this morning, as its lines have crossed. From the mere technical stance, the tone is rather bearish, even though analysts remain cautious. Given the overbought situation, oil futures had become susceptible to a downward correction like the one occurring yesterday evening. After such a strong reaction, the cause of which is still unknown, it is hard to forecast how markets will develop. Technically, the situation is slightly bearish, given the stochastic indicator, whereas the overbought situation has dissolved and selling pressure has decreased.

U.S.

Nymex access Steady : Oil futures have edged higher on Globex electronic trading platform this morning. After yesterday's sharp decline, market participants remain cautious although oil futures have already somewhat recovered from their losses. The traded volume is slightly over average. Market players eye the development at stock and forex markets as well as today's economic indicators and the API's oil inventories data, published at 10.30 p.m.

Survey of US Petroleum inventories due out tonight at 22:30(API) and Wednesday at 16:30(DOE)
Crude oil -1.1; distillates +0.8; gasoline +0.6 million barrels vs previous week

Houston (ex-wharf indications 17-9)

380cst $678
180cst $715
MGO $1165

New Orleans (ex-wharf indications 17-9)

380cst $684
180cst $723
MGO $1070

Singapore (correct as per 14:30hrs LT-delivered indications)

Crude is dropping with WTI -$2.67. Singapore paper is continuing it bearish decline with -$16.50 for 180cst and -$15.05 for 380cst for Oct, and for Nov 180 cst -$16.00 and 380cst -$14.05 with MGO contracts Oct -$2.95 and Nov -$2.94. The cargo market is receading with 180cst -$7.31, 380cst -$4.50 and MGO -$0.39.

The Singapore fuel oil markets fell between -$4.5 to -$7.5 during the morning Platts window on the start of the week. Delivered bunker premiums were around $8.0- 9.5 above cargo prices yesterday. This morning the market is trading down.

High premiums for prompt deliveries.

380 cst $670
180 cst $685
MGO $970

ARA (Amsterdam - Rotterdam - Antwerp)

The ARA is well supplied, with some demand picking up, although the on-going maintenance at the Flushing refinery was still affecting high sulphur availability. With short cutter stocks underpinning the markets and a heavy maintenance programme for September with two important North Sea oilfields set for a one month closure. High premiums are charged for prompt enquiries.

Rotterdam

Indications for delivered bunkers:

380cst : $ 653
(1.0 %) :$ 714
180cst: $ 685
(1.0 %):$ 755
MGO 0.1%S: $985