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PVM Midday Report 27 April 2015

Published Monday, April 27th, 2015

Headlines

  1. Speculators in ICE Brent raise net length to fresh record high in week to April 21
  2. Iran to begin crude production from Pars gas field in 2016
  3. Saudi deputy Oil Minister sees global oil market conditions as “excellent”
  4. BofA raises 2015 Brent & WTI forecasts to $58 & $53 bbl respectively

Oil                                                                                              

Fundamentals: BofA has become the latest financial institution to increase its 2015 crude estimates with Brent and WTI seen averaging $58 and $53 bbl, respectively. Libya’s 100,000 bpd El Feel oilfield remains offline after operations were suspended over the weekend while the nation’s eastern state-oil firm has revealed crude output is steady at 270,000 bpd. Iran has announced that it expects to start extracting oil from its enormous Pars gas field next year as it continues to strive to reach its crude output target of 3 mbpd. Meanwhile, speculators in ICE Brent have increased net length for a fifth straight week by 8,351 lots to a historic high of 271,929 in the seven days to April 21.

Technicals: It’s no great surprise that the contracts are giving up a bit of ground this morning. The overall view that we are going higher in the long term still holds whilst Brent remains over 64.42; Heat 192.65 (breached at the moment); RBOB 197.95; and Gasoil above 584.25. These levels could easily be tested today. Whilst they hold there are targets higher on Brent to 67.91; Heat to 198.85; RBOB to 206.29; and Gasoil to 601.75. These would only be the first targets in an overall move that is expected to be higher, but one takes it step by step. The stochastics are positive and a bit high. WTI looks poor and de-linking. A move confirmed by a close below the 5 day round 56.93 would be bearish. Watch the supports on the rest – they may be breached but are likely to hold by the end of the day.

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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.