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PVM Midday Report 14 August 2015

Published Friday, August 14th, 2015

Headlines

  1. EIA estimates Iran ready to release 100,000 bpd of stored oil
  2. Eurozone 2Q GDP growth eases to +0.3% from +0.4% in the previous quarter
  3. Greek parliamentarians approve terms of its €85 billion bailout package
  4. Euro-area annual inflation rate holds steady for third straight month in July at +0.2%

Oil                                                                                              

Fundamentals: The WTI Oct/Nov spread is coming under continued downward pressure from a reported build at the Cushing delivery hub along with the ongoing crude distillation unit shutdown at BP’s Whiting, Indiana refinery. It is currently weakening by a further 5cts/bbl to -1.25cts/bbl and stands at its lowest on record. Meanwhile, Brent is holding up reasonably well despite EIA estimates that global supply could jump 100,000 bpd once Iran starts releasing oil held in storage and that the Persian Gulf country has the “technical capability” to increase crude oil production by 600,000 bpd by the end of next year.

Technicals: The market is ebbing and flowing. It lacks harmony in that not all the contracts agree saying the same thing. This makes for an erratic and disjointed market where exposure should be kept limited. The key is the action around the short term (s/t) MAs, and especially how RBOB fares at the 8 day MA around 168.71. This must hold or the driving force north will be removed and the contracts would be vulnerable to further losses. Meanwhile both the crudes are below the s/t MAs. WTI needs to move and close below 42.03 and Oct Brent below 48.90 to have target lower. Heat must hold the 8 day MA around 156.37 to still maintain upside potential and a m/c over 157.57 would be positive. Gasoil is holding over the 5 and 8s around 476.50 and 474.50. The stochastics are positive on all but WTI. Watch the short term MAs – they hold all the clues.

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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.