Technical & Fundamental Oil Reports Specialists

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Monthly oil forecasts deliver mixed messages

Published Thursday, August 13th, 2015

China’s currency games kept the market dancing with a second day of devaluation. Overnight there has been further slippage but intervention by the PBOC has steadied the ship for the moment. If the Chinese government is a convert to market forces driving the renminbi exchange rate the expectation is that there are more falls to come, but it would be a foolish trader who forgot that the government has a history of embracing the market when it suit its purposes and intervening strongly when it does not.

The outbreak of a currency war has thrown a curve ball at interest rate expectations with the market now pricing in only a 40% chance of a US rise in September from 55% last week. The change in sentiment supported US equity prices and weakened the dollar which helped the oil contracts close marginally higher. Brent gained 48cts/bbl (49.66) and WTI 22cts/bbl (43.30). The EIA weekly stock figures discussed below were largely neutral but there was a bigger gasoline draw than expected which supported RBOB which our technical analyst considers to be the key contract to watch at the moment. Spare a thought for Canadian oil sand producers looking at $23 bbl oil at the moment. Mark Carney jumped from the Bank of Canada at the right time. Better to be lucky than competent!

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Posted by David Hufton