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PVM Midday Report 30 July 2015

Published Thursday, July 30th, 2015

Headlines

  1. Iran needs $100 billion in oil investments to bring crude output back to pre-sanction levels
  2. OPEC see oil prices stabilising come end-2015 and next year with eventual rebound
  3. Use of bypass line allows Iraq’s Kirkuk-Ceyhan pipeline to resume operations
  4. Germans out of work unexpectedly rises by 9,000 in July; jobless rate steady at 6.4%
  5. Embattled Greek PM proposes internal party referendum on recently agreed bailout deal

Oil                                                                                              

Fundamentals: The use of a bypass line has allowed crude flows along Iraq’s Kirkuk-Ceyhan to resume following yesterday’s attack. OPEC’s Secretary-General has claimed that oil prices will eventually rebound and are set to stabilise come the end of the year and into 2016 as the market rebalances itself. This was supported by the latest Reuters poll on crude prices which predicts average 2015 Brent and WTI prices at $60.60/bbl and $54.90/bbl respectively. Meanwhile, Iran has hinted that it needs around $100 billion of investments in its oil industry to bring production back to levels seen five years ago of more than 3.5 mbpd.

Technicals: Yesterday’s upside correction has gained momentum this morning with WTI and Brent trading above previous key resistance at the 8-day MAs which are 49.03 and 53.96 respectively. Sep’ Heat and Sep’ RBOB are lagging slightly behind their targets higher at 163.95 and 179.28 but shorts are advised to cut their losses should these aforementioned levels be moved and closed over. Gasoil is the laggard and its upside potential looks limited therefore rallies to 501.25 should provide a good selling opportunity. The complex is on the cusp of turning higher but it’s the closes that count and the downtrend will only be put into question should the 8-day MAs be below tonight’s close. Until then it is advised to be patient until tonight’s settlement where the next leg should become a lot clearer.

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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.