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PVM Midday Report 20 July 2015

Published Monday, July 20th, 2015

Headlines

  1. Speculators raise net length in ICE Brent crude by almost 11% in week to July 14
  2. Saudi crude oil exports in May at 6.935 mbpd, down from 7.737 mbpd in April
  3. Sales of diesel in China fall 10% y/y in June; growth in gasoline sales also declines
  4. Greek banks reopen following three-week closure; capital controls remain but eased slightly
  5. Athens receives €7 billion bridging loan; spent immediately on ECB and IMF repayments

Oil                                                                                              

Fundamentals: Figures provided by Saudi Arabia have revealed that its crude oil exports dipped in May to 6.935 mbpd from 7.737 mbpd in the previous month as domestic refiners ramped up production runs. Sales of diesel in China were seen falling 10% y/y in June on rising crude oil prices and a perceived slowdown in economy activity. Moreover, exports of Chinese refined petroleum products rose 5.3% in the first six months of 2015 to 14.78 million tonnes from the same period a year ago according to government data. Bets on rising ICE Brent crude oil prices rose strongly in the week to 14 July after net length was increased by 22,236 lots to a total of 228,046 contracts – the highest since mid-May.

Technicals: Friday’s lack of harmony has been replaced with consensus as the contracts head south in unison. The s/t daily MAs on all bar RBOB remain above the price action and therefore they have objectives lower to 49.69 WTI; 55.50 Brent; 161.36 Heat and 504.25/50 Gasoil. Although the slightly negative outlook still prevails, RBOB looks the most promising as it holds above its key 100-day MA at 191.98 but needs to test its important resistances at 194.23/195.78 (8/13) in order to save itself and the others from further weakness. Until then, expect supports to come under increasing pressure.

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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.