Correction: In the World Crude Report – Americas (3^rd Update) please read ...WTI OCT 68.82 -0.52... instead of ...WTI OCT 68.82 -3.21....  A corrected report now follows.

COMMENTS

  ***CASH*** 

It was an extremely quiet start to the week in both foreign delivered as well as domestic activity.

A few foreign cargo offers made the rounds but no deals were reported.

Overall volume on domestic trades were unimpressive.

LLS traded between WTI plus 75 and 70 cents.  MIDLAND SWEET was reported done at 27 cents discount to Cushing.  Thunder Horse barrels changed hands at WTI less 2.00.

WTS traded between 2.15 and 2.10 discount to WTI.  MARS started at WTI less 3.55 and sold down to 3.75 discount.  Poseidon was reported sold at 3.60 discount. SGC traded at WTI less 3.75.

With the Sep-Oct contango bouncing around CMAs were sold between minus 65 and minus 57 cents.

No cash WTI activity was noted following the NYMEC close; with bid/offers for October crude straddling the 68.86 settlement but no deals were recorded. During electronic trading, the value for the front month slipped towards 68.61 on sentiment that seasonal factors will hold prices down.

The forecast for the weekly Stats called for a substantial drawdown in crude stocks due to a decline in foreign imports but a build in distillate and gasoline inventories.

***LATIN AMERICA***

 The recent PetroPeru crude purchase tender was filled with Oriente and Napo from a trader.

***U.S. CLOSE***

***NOTE: WTI is valued against the NYMEX settlement. All grade differentials are assessed against cash WTI. **Cusiana and Basrah are assessed against the forward WTI month.    

FUTURES

  ***NYMEX Light Sweet Settlement*** Oct 68.86 (Minus 43)   Nov 69.37 (Minus 35)  Dec 69.86 (Minus 34)

 ***ESTIMATED VOLUME*** 684,882

Crude prices were mixed overnight but maintained a slight downside bias following Friday’s steep sell-off . The US dollar strengthened initially and global stock markets fell, driving the October WTI contract through the previous low which also represented near term support. An intra-day low of 68.02 (Print less 1.27) was established before running out of steam. A portion of the losses were given back ahead of the opening bell and floor session started at 69.04 (minus 25 cents). An attempt to work higher as the dollar fell versus the euro and the stock market moved higher slightly lifted the front month to establish the session’s high at 69.51 (plus 22 cents). The rally attracted selling and the front month pulled back into negative territory where it bounced around within a narrow range. On Friday, the CME released an advisory warning notifying market participants of tighter enforcement of position limits on the exchanges in order to prevent speculation. A cautious market remained rangebound until the closing bell; with October WTI settling at 68.86 (minus 43 cents) while the Oct-Nov contango widening a few cents.

The market is now trading in the lower portion of the congestion range but there are no signals that it will continue to move lower and could start working back up. Technicals and fundamentals remain out of step; with abundant supplies and lack of buying interest in the fundamentals unable to force prices down as long as currency and equities lead the way in another direction.

TECHNICAL OUTLOOK:  Tuesday  15  Sep  2009  (Oct WTI)

SUPPORT: **** 67.70/65.30    RESISTANCE: **** 70.40/73.30