Technical & Fundamental Oil Reports Specialists

Follow us

Oil prices gained last week but is it sustainable?

Published Monday, April 13th, 2015

It has been an odd week in that the five major oil futures contracts finished the period in positive territory whilst their structure did not back up this optimism. WTI is the most prominent example of this anomaly where the front-month contract gained 5.09% over the week whilst the May/June spread lost 41 cents/bbl. Brent also strengthened 5.31% but the front spread only gained 6 cents/bbl. Only Heating Oil showed genuine strength with flat price closing 4.97% up on the week and the front spread gaining 48 points. RBOB strengthened 2.61% but the May/June spread fell 78 points.

What could be the reason behind this discrepancy? The best way to sum it up is to conclude that the battle between bullish expectations and bearish facts has been won by the former but it is also fair to say that the war is far from over. It is probably not far from the truth either that the flat price rally can be attributed to impatience.

This impatience started to grow last week over Iranian rhetoric about the detailed framework of any comprehensive nuclear accord. Iran’s insistence on lifting sanctions the same day as the comprehensive agreement is signed and its reluctance to allow increased monitoring of nuclear sites cast doubts about their being any final agreement at all, never mind the possibility of rising oil exports. In short, additional Iranian oil exports are not deemed imminent, something that could easily come back to haunt oil bulls. 

to read the rest of the report, please click here

Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.