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…
The love that has been lost between the stock and oil markets for quite some time now was again missing last week as share prices lost value while crude oil futures contracts registered their second consecutive weekly gain. Purely looking at the weekly settlement prices one could have the feeling that oil is on the mend after seven months of decline but it is worth having a deeper look at last week’s events to get a reliable picture as to why oil was generally bullish and stocks bearish. In doing so one has to re-call events in the eurozone and in particular the ongoing Greek financial saga. As far as the oil market is concerned US commercial stock levels must be examined as well as the geopolitical developments in the Middle East.
European stock indices ended a challenging week on a positive note but this ultimately came too late for the Eurofirst 300 which posted its biggest weekly fall of 2% this year. Downward pressures also made their presence felt on Wall Street as US stocks joined the slump lower with the S&P 500 losing 2.3% on the week to give up its 2015 gains. The reasons behind investor reticence and increased volatility came from a myriad of significant factors including encouraging flash eurozone PMI readings, rising French and German consumer morale, soft US economic data, a fresh bout of Middle Eastern tensions and yet more ECB snubbing of Greek demands for fresh financial aid. The endless shunning of pleas for emergency loans doesn’t however seem to have dampened the spirits of Greece’s Prime Minister who was quoted over the weekend as being optimistic of a “happy ending” to the situation.
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