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PVM Midday Report 06 August 2014

Published Wednesday, August 6th, 2014

Headlines

  1. Iranian Oil Ministry confirms Russian oil deal
  2. Italy slips back into recession after 2Q GDP shrinks 0.2%
  3. UK Industrial production rises 0.3% between May and June, misses forecast of +0.6%
  4. German factory orders decline 3.2% in June from May
  5. 18 Ukrainian soldiers killed in fresh clashes with separatists

Fundamentals

Economy: European stocks are tracking a softer session on Wall Street as heightened Ukraine tensions and disappointing economic data from the currency-bloc triggers a bout of risk aversion – the Eurofirst 300 is tumbling 1.4%. A build-up of Russian armed forces along the Ukrainian border is dampening the broader sentiment and is denting demand for the country’s assets – the rouble is slipping 0.5% to a four-month low whilst the Micex index is easing 1.5%. Risk appetite is being further eroded by news that Italy has slipped back into recession after its economy shrank by 0.2% in 2Q, having declined by 0.1% in 1Q. Weak manufacturing data from the Eurozone’s engine economy added to the bearish tone as German factory order unexpectedly fell 3.2% in June, the biggest contraction since September 2011. The overwhelmingly cautionary mood is sending haven assets higher with gold adding $1 to $1,289/oz whilst yields on benchmark US Treasuries ease 3 bp. Equivalent maturity Bunds are down to a record low of 1.11%.

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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.