PVM Midday Report 03 June 2015

Headlines

1. Iran sees oil output increasing by 1 mbpd within 6-7 months of sanctions relief
2. Kurdistan suspends crude transfers to Iraq’s state-owed oil company
3. Basra Heavy crude set to boost Iraqi oil exports by 100,000 bpd in June
4. Eurozone jobless rate dips to three-year low, retail sales climb 0.7% in April

Oil                                                                                              

Fundamentals: Iran’s oil minister has signalled that its crude output will rise by 500,000 bpd within a month of sanctions being lifted with production increasing by 1 mbpd within 6-7 months. His Iraqi counterpart has revealed that its June oil exports are predicted to reach a record high with an expected increase of 100,000 bpd coming from the newly launched Basra Heavy crude grade. Meanwhile, sources have hinted that Kurdistan is no longer transferring crude to Iraq’s state oil firm SOMO after a long running dispute over payments and puts their recent oil-sharing deal at risk of collapsing.

Technicals: Yesterday’s strength has not followed through this morning and the contracts are retracing somewhat with all apart WTI and Heat having fallen below their short-term MAs. However, it’s the settlements that count and only closes below the following will dampen the hitherto constructive outlook: 59.54 WTI; 64.37 Brent; 190.89 Heat; 201.81 RBOB and 581.50 Gasoil. Caution is advised and length should be trimmed on closes below the aforementioned targets.

Economy

European bourses are ticking higher as optimism builds that Greece will accept a cash-for-reforms offer reportedly put forward by its creditors – the Eurofirst 300 is advancing 0.4%. Talks between Alex Tsipras and representatives from the Troika are due to take place this evening in Brussels where hopes are that progress towards a deal will be made in time for Friday’s IMF loan repayment. The mildly upbeat mood has been complimented by solid eurozone retail sales figures which revealed a 0.7% rebound in April following a fall in March. This in turn was tracked by positive unemployment data from the currency-bloc after the jobless rate dipped to a three-year low of 11.1% in April from 11.2% in the previous month.

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