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PVM Midday Report 13 July 2015

Published Monday, July 13th, 2015

Headlines

  1. OPEC sees 2016 global oil demand growth at 1.34 mbpd, call on its oil to rise to 30.07 mbpd
  2. Chinese June imports of crude oil surge to 7.18 mbpd; +31% m/m, +27% y/y
  3. Secondary sources put June OPEC output at 31.38 mbpd; Saudi production at record peak
  4. Speculators increase net length in ICE Brent by 7,117 lots in week to July 7
  5. Greece bailout deal agreed; harsh measures to be voted on by lawmakers in Athens

Oil                                                                                              

Fundamentals: OPEC has released its first supply/demand estimates for 2016 in which it expects global oil demand growth to rise to 1.34 mbpd and the call on its crude to increase by 860,000 bpd to 30.07 mbpd. Moreover, the cartel revealed that Saudi oil production rose by 200,000 bpd m/m in June to a record high of 10.56 mbpd as secondary sources put the organisation’s June output at 31.38 mbpd, a 283,000 bpd monthly increase. Chinese crude imports surged to 7.18 mpbd in June in what was a 31% jump on the month and a 27% y/y gain on rising strategic and commercial storage tank fills. Meanwhile, speculators have boosted bets on rising ICE Brent crude prices after net length increased by 7,117 lots to 205,810 in the week to July 7.

Technicals: The 5 and 8 day MAs are the key and the market is around them at the moment. They will give us the next leg. WTI has clawed its way back over the 5 day around 52.40 and must remain over here or it will have a target to 50.58. There is no objective higher unless it moves and closes (m/c) over the 8 day around 53.55. A test of this level is likely. Brent is above the 5, around 57.92, but being held back by the 8 around 58.56. It would need a m/c over the 8 to be looking for higher numbers. Heat is below the 5 day around 172.57 and the 8 around 175.21. RBOB is still below all the s/t MAs with the lowest around 199.49 – it needs to m/c over here. Gasoil is above the 5, around 530.75, but below the c/p at 538.25 and the 8 day around 541.00. There more work to do yet, but whilst over the 5s there is limited downside. Watch the 8s on a rally.

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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.