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NOTE: for full details on the criteria ICIS pricing uses in making these price assessments visit www.icispricing.com and click on “methodology”.
COMMENTS
***CASH***
Adding to the list of foreign delivered cargos on offer into the US, two parcels of Urals are being reported moving trans-Atlantic. The negative Brent-WTI arb continues to narrow and the Gulf Coast domestic grades have re-aligned in value helping make foreign cargo economics more competitive.
The sell-off on the NYMEX spooked domestic market participants and the overall liquidity suffered, with several key grades not producing deal evidence.
LLS started the day trading at WTI plus 23.80 and sold down to plus 22.90 where late bids were seen.
MARS saw bids/offers within a wide range either side of 19.25 but no barrels were reported changing hands.
HLS was reported done between WTI plus 23.90 and 24.10.
WTS barrels were sold between WTI less 95 cents and minus 1.00.
ANS delivered into the USWC continue to trade actively, with another September cargo reported sold at WTI plus 20.50.
CMAs traded between minus 50 and minus 55 cents.
In forward activity, October LLS traded at WTI plus 21.50, with Cal ’12 barrels selling at 16.00 premium to Intermediate.
Following the NYMEX close, the oversold conditions attracted light buying in cash WTI, with bids for September barrels indicating 86.77 (Print plus 14 cents) but sellers did not stir.
During electronic trading, the slide continued in line with a plunging stock market and September crude dipped towards 86.24 but did not penetrate the earlier established floor low.
Eventually, more buying interest appeared on bottom picking ahead of Friday and the value for September climbed towards 86.53 and consolidated either side of that number, still below the 86.63 floor settlement.
***LATIN AMERICA***
Results of PetroPeru’s crude purchase tender for a 400,000 barrel cargo for delivery 2-6 October were not forthcoming.
***U.S. CLOSE***
| CRUDE | MONTH | BUY | / | SELL | CRUDE | MONTH | BUY | / | SELL |
| WTI | SEP | -0.39 | | 0.04 | MIDLAND | SEP | -0.47 | | -0.40 |
| CMAs | SEP | -0.58 | | -0.52 | WTS | SEP | -1.05 | | -0.95 |
| LLS | SEP | 22.90 | | 23.15 | BASRAH* | SEP | 17.60 | | 18.20 |
| MARS | SEP | 19.10 | | 19.25 | CASTILLA** | SEP | 7.00 | | 8.00 |
| THHORSE | SEP | 23.10 | | 23.75 | ORIENTE** | SEP | 8.00 | | 9.00 |
| ANSWC | SEP | 20.10 | | 20.60 | | | | | |
| | | | | | | | | | | |
***NOTE: WTI is assessed against the NYMEX settlement. All grade differentials are assessed against front month cash WTI. *Basrah, Castilla and Oriente are assessed against the second month **FOB Load Port
FUTURES
***NYMEX Light Sweet Settlement*** Sep 86.63 (Minus 5.30) Oct 87.04 (Minus 5.29) Nov 87.49 (Minus 5.29)
***ESTIMATED VOLUME*** 879,823
Once again, sentiment that Wednesday’s sell-off had been overdone attracted some overnight buying, lifting the September WTI contract to establish the session’s high at 92.59 (Print plus 66 cents) before running out of steam. Scaled down selling entered the market on the back of a firm dollar and jitters regarding slowing economic growth. Floor trading opened at 91.12 (minus 81 cents) and the sell-off gained momentum tracking further selling in the stock market. A feeding frenzy and a rout in the equities drove crude prices through the first intra-day support barrier, triggering sell stops. The losses were extended and no news were good enough to stop the bleeding. A second support barrier was penetrated adding to the losses as rallies were seen as selling opportunities. An intra-day low of 86.04 (Print less 5.89) was established before the selling was exhausted. A late bounce led front month WTI to settle at 86.63 (minus 5.30). The Sep-Oct contango held steady.
WTI has now broken out of congestion and the bias has switched to the downside, calling for rallies to be seen as selling opportunities. The market is also in oversold territory and in need of a correction but moves to the upside will be capped until more favorable economic data injects optimism into the market. There is a cluster of support in the 84.10-83.85 area which, if penetrated, would carry a measured downside target of 75.40. First line of resistance is now the session’s high of 92.59 but no signal of strength will emerge until there is a break and close above 95.68.
TECHNICAL OUTLOOK: Friday 5 Aug 2011 (Sep WTI)
SUPPORT: **** 89.43/ 86.61 RESISTANCE: **** 94.20/98.60
