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PVM Midday Report 24 April 2015

Published Friday, April 24th, 2015

Headlines

  1. Chinese commercial crude oil stocks dip by 2.9% at the end of March
  2. Iraq announces loadings of its new Basra Heavy crude grade to begin in May
  3. China raises retail gasoline and diesel prices by $48 and $46 tonne respectively
  4. Greece’s Varoufakis offers reform concessions to creditors, hopeful of an imminent deal
  5. German indicator of business morale climbs to 10-month high in April

Oil                                                                                              

Fundamentals: Societe Generale has raised its 2015 Brent and WTI forecasts on expectations of falling US crude output to $59.54 and $53.62 bbl, a rise of $4.33 & $4.28 respectively. Official figures have revealed that Chinese commercial crude oil inventories slipped by 2.9% at the end of March from a month ago. Equivalent figures for product oil stocks pointed to a rise of 9.14%. Staying with China, it has raised retail prices for gasoline and diesel by $48 and $46 per tonne respectively in its latest weekly adjustment to fuel prices. Meanwhile, Iraq has announced that loadings of its new Basra Heavy crude grade will begin in May despite having earlier delayed liftings to June.

Technicals: The contracts have gained value as expected but much work remains for bullish comfort. WTI is the most unconvincing as it just about holds above its short-term MAs and needs a close over 58.97 to greenlight further upside. Brent looks decent but needs another close over 64.95 to keep bulls happy. Heat is making hard work of its key upside objective at 193.83 and needs to ensure a close over its 8-day MA at 189.03 to prevent a slump early next week. RBOB remains pivotal and upside momentum will be lost if it fails to hold 197.95 while it still has an ultimate target at 206.29. Gasoil looks to be heading higher so long as it stays above 584.25. The complex, with the exception of WTI, has added value as predicted but only move and closes over key upside targets will have bulls going into the weekend in a cheerful mood. Nevertheless, it is not advised to be short.

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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.