Technical & Fundamental Oil Reports Specialists

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All we need is growth

Published Tuesday, June 9th, 2015

Although OPEC have guaranteed an oversupplied market for the rest of the year there was no major price pullback yesterday after Friday’s counter-intuitive higher close. Brent lost 62cts/bbl (62.69) and WTI 99cts/bbl (58.14). Perhaps the fall would have been greater had the dollar not weakened. Figures from ICE revealed a big fall in Brent net speculative length in the week ending June 2nd. Since the recent NSL highs in early May, Brent has seen a 27% fall compared to only -8% on WTI.

Traders not only had OPEC’s renewed commitment to fight for market share as an excuse to sell, they also had negative trade data from China. Chinese imports fell by 7.6% in May with crude oil imports down 26% from April and 11% year-on-year. The Chinese stock markets rallied on the basis the poor figures will ensure further monetary stimulus and there is also the imminent decision from MSCI on whether Chinese stocks will be included in their energy market index.

Turkey and Greece are far from being the best of friends and both were unpopular with investors yesterday. The Turkish stock market lost 5.1% in response to the election result over the weekend which signals political turmoil. The lira has fallen to an all-time low against the dollar and talk of a Turkish debt crisis is widespread. The main Athens equity index lost 2.7% on signs of a genuine loss of patience by “friends” of Tsipras working in the creditor negotiating team. The French finance minister believes that there will be “no drama” if Greece leaves the euro, a view echoed by ECB governing council member Christian Noyer.

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Posted by David Hufton