PVM Midday Report 13 June 2016
Headlines
OPEC hints at tighter oil balance in 2H 2016; output down 100,000 bpd in May
Chinese implied oil demand falls by 380,000 bpd in May y/y to 10.24 mbpd
Iran’s biggest oil…
A bout of risk aversion at the tail end of last week triggered by the announcement of further western sanctions against Russia ensured that global equity markets headed lower. The feeling of unease looks set to continue as attention turns to whether Russian threats of retaliation will come to pass in the coming days. Adding to the downbeat mood was the release of robust US retail sales and business inventory data which weighed on risk appetite as jitters over a sooner-than-expected rate hike returned to the fore. The ensuing slide saw the Dow and S&P 500 close 0.3 and 0.6% lower with additional downside potential likely in the run up to this week’s FOMC meeting. Overnight news from Asia will do little to reverse the cautionary tone surrounding risk assets after figures revealed Chinese industrial output grew at its slowest rate in nearly six years in August.
As it turns out Thursday’s oil price rally was just a correction in an otherwise down-trending market and bearish order was restored on Friday. In the absence of any significant market-moving news the latest supply/demand reports are held responsible for Friday’s renewed slide. Fears about global supply outpacing global demand sent WTI 56 cents/bbl lower and Brent 97 cents/bbl down. Heating oil lost 156 points on the day and RBOB 53 points.
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