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PVM Midday Report 11 February 2015

Published Wednesday, February 11th, 2015

Headlines

  1. Kuwait cuts its March crude OSP by 80cts/bbl to Asian buyers
  2. United Steelworkers Union say little progress made is US refinery strikes
  3. Greek PM wins parliamentary vote of confidence ahead of key debt talks
  4. US mortgage applications index falls by 9% in week to February 6

 

Oil                                                                                              

Fundamentals: Yet another build in US weekly commercial stocks is expected which in turn is weighing on oil prices. The API predicts a 1.6 million bbl build in crude and gasoline inventories, with a 979,000 bbl rise in Cushing stocks, as well as an increase in distillate stocks of 497,000 bbls. Kuwait has mirrored Saudi Arabia’s decision to cut the cost of its crude to Asian buyers after it reduced its March OSP by 80cts/bbl. Moreover, Kuwait’s oil minister has reportedly said that oil prices will rebound in the second half of 2015 and may reach $60/bbl by year-end.

Technicals: I harbour serious doubts about further upside potential. The contracts have completed a price cycle, from the 34 day MA to the 55 day and halted. The 55s were the objectives and all but WTI have achieved these targets and now closed below. In the meantime the stochastics are very wobbly and in some cases tunred negative. The ingredients are there for the market to now head lower and it would not take much of a nudge to start the rot. It is not advised to be long.

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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.