PVM Midday Report 01 June 2015

Headlines

1. Iraq crude oil exports climb to record average of 3.145 mbpd in May
2. Speculators trim net length in ICE Brent crude by almost 8% in week to May 26
3. North Sea Brent crude stream to load 77,000 bpd in July, up from 60,000 bpd in June
4. Sources reveal first shipment of Iraq’s new Basra Heavy crude
5. Final Eurozone factory PMI inches higher to 52.2 in May, just misses flash estimate

Oil                                                                                              

Fundamentals: A survey has put OPEC oil output at an almost three-year high of 31.22 mbpd in May which represents a marginal 60,000 bpd increase from the previous month. Staying with OPEC, official data has shown that Iraq’s crude exports climbed to a historic high of 3.145 mbpd in May from 3.08 mbpd in April. The announcement comes on the day in which sources claim that it exported the first shipment of its new Basra Heavy crude grade with two million bbls being loaded at the southern port of Basra. Speculators have trimmed another chunk of their net length in ICE Brent crude after figures revealed they cut net long positons by 18,884 lots to 222,357 contracts in the week to May 26. Meanwhile, the North Sea Brent crude stream is set to load 77,000 bpd in July, an increase from the 60,000 bpd planned in June.

Technicals: It’s not too much of a surprise to see the market give up some value this morning. The surge in prices on Friday was always going to attract some profit taking and a cooling off period. All that the contracts are doing is re-testing the short term MA supports. No serious support has been breached yet. The support is on WTI around 59.49 (13 and 34 day); Brent 65.02 (34 day) then 64.56 (8 day); Heat 192.77 (8 day) then 190.49 (5 day); RBOB 202.07 (13 day); and Gasoil 592.75 (34 day). So long as there are no closes below the lowest s/t MA the contracts are in ok form, but it would be better if the above supports held. The odds are on the s/t MAs holding and higher numbers later.

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