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PVM Midday Report 27 July 2015

Published Monday, July 27th, 2015

Headlines

  1. Speculators trim net length in ICE Brent by 6.4% to end three-week run of increases
  2. Saudi humanitarian truce in Yemen falls apart after reports of shelling and gunfire
  3. Talks on construction of first section of Russian-Turkish pipeline to begin soon
  4. Ifo survey of German business sentiment inches higher in July on waning Greek concerns

Oil                                                                                              

Fundamentals: Financial speculators have pared back bets on rising ICE Brent crude prices, ending a run of three weekly increases, after cutting net length by 14,617 lots to 213,429 contracts in the week to July 21. The Russian deputy PM in comments over the weekend has confirmed that talks with companies who will be involved in a Turkish pipeline project aimed at delivering Russian gas to Europe without going through Ukraine will start soon. Meanwhile, the five-day Yemeni ceasefire announced by Saudi Arabia and its Arab allies which took effect last night has proved short-lived after reports of clashes and gunfire in the north and south of the beleaguered nation.

Technicals: WTI has slipped below what has been stubborn support at 47.80 and is now expected to fall to the its continuation low on April 1 at 47.05. Brent is inching lower towards its ultimate downside target at 53.19, a test of which is expected either today or tomorrow. Heating oil has moved below its erstwhile important downside objective at 161.36 and is around its next target lower at 160.50 – a close below which will reinforce the overwhelmingly bearish outlook on this contract. RBOB remains well below its 200-day continuation M/A at 184.32 and bears will be looking to take profit on a looming test of 178.48. Similarly, profit is to be taken should the 487.50 range support on Gasoil be conclusively closed below. The complex has duly put supports under further pressure and the downtrend remains intact. With bears in control of the market the advice remains not to be long.

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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.