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PVM Midday Report 25 February 2014

Published Tuesday, February 25th, 2014

Headlines

  1. Russian exports of gasoline and gasoil rise by 20.4% & 10.4% in Jan from Dec
  2. Crude oil flows to Yemeni Ras Isa oil terminal suspended after pipeline attack
  3. UK mortgage applications in January reach highest level since September 2007
  4. European Commission raises forecast for Spanish 2014 GDP growth to 1%

Fundamentals

Economy: European equities are easing from multi-year highs as investors fret that the decision by China to let the yuan fall against the dollar is a further sign of an economic slowdown – the Eurofirst 300 is down 0.4%. Adding to the unease are persistent EM tensions as Ukraine’s hryvnia slides to a new record low whilst problem child Turkey also experiences a weakening of its lira. In spite of these concerns, global sentiment has a whole is receiving support from the latest surge on Wall St with benchmark US Treasuries and German Bunds stable. The US dollar is coming under pressure as sterling gains 0.2% following figures which showed UK mortgage approval hitting a six year high last month. Moreover, the euro is making headway versus the greenback as the European Commission raises its forecast for Spanish growth in 2014 to 1%.

Oil: In line with its objectives of export growth, exports from Iraq’s southern terminals have so far averaged 2.36mbpd in February and represents a significant increase on the 2.04mbpd recorded in January. Crude oil flows to the Ras Isa oil terminal in Yemen have been suspended following an attack on the Maarib pipeline. Meanwhile, figures have shown that Russian exports of gasoline and gasoil in January rose by 20.4% and 10.4% respectively from the previous month.

Technicals

The contracts are under pressure. We are experiencing a classis slingshot move from below the 5s to the 8s.This has occurred on WTI, Brent and Gasoil. Heat is even weaker and has moved below the 8 towards the 13 and Gasoil is struggling to hold the 8. The key supports that must hold are on WTI at 101.85 (8); Brent 110.25 (8); Heat 306.84 (13); RBOB 282.31 (8) and Gasoil 931.00 (8) and then 926.00 (13). The 5s remain above as resistance. The stochastics are negative making any rally hard work.

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Posted by Stephen Brennock

Stephen Brennock joined PVM in 2013 after having worked as a project manager for a business development firm. He graduated with a degree in Business Management in 2007.