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PVM Midday Report 27 May 2015

Published Wednesday, May 27th, 2015

Headlines

  1. Iranian nuclear negotiator claims June 30 deadline may be extended
  2. June loadings of Iraq Basra Heavy crude sell at discount to OSP on ample volumes
  3. Saudi-Kuwait operated Wafra oil field remains offline to allow for dispute to be resolved
  4. Gfk survey of German consumer morale improves in May to highest level since end-2001

Oil                                                                                              

Fundamentals: June loadings of Iraq’s new Basra Heavy crude grade have sold at a discount of more than $1/bbl to its OSP due to bigger-than-expected export volumes and subdued demand from Asia for the oil. Following remarks from western ambassadors that a nuclear deal with Iran before June 30 was unlikely, Tehran has revealed that the self-imposed deadline may be extended to allow talks to continue. Meanwhile, the Wafra oil field which is jointly run by Saudi and Kuwait has remained offline following the completion of maintenance works to allow its operators to resolve an ongoing dispute.

Technicals: The contracts recovered earlier this morning from a poor day yesterday. The question is does this recovery have any staying power. The answer is that it’s what happens at key supports today will give all the clues. WTI is still above the critical 34 day Ma at 57.70 – a move confirmed by a close (m/c) below there tonight and this contract goes lower. Brent would follow WTI and has no key level as support, but m/cing below 63.46 would not be good. Heat needs to hold over the c/p at 190.31. RBOB needs to stay over 198.70 and 198.21 to still look ok. Watch RBOB it could well support the rest. Gasoil needs to be over 584.50. The market is vulnerable but it’s early days yet. Remain patient and careful.

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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.