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PVM Midday Report 12 October 2015

Published Monday, October 12th, 2015

Headlines

  1. OPEC raises projected demand for its crude oil in 2016 by 510,000 bpd to 30.82 mbpd
  2. Secondary sources put OPEC Sep’ oil output at 31.57 mbpd, up 110,000 bpd on Aug’
  3. Kuwaiti oil minister claims no calls from OPEC members to raise output ceiling
  4. Iraq and Kuwait cut crude OSPs for November loadings to Asia
  5. Barclays trims 2015 & 2016 Brent price forecasts to $54.50/bbl & $60/bbl respectively

Oil                                                                                              

Fundamentals: In its latest monthly report, OPEC cut its forecast for 2016 global oil demand growth by 40,000 bpd while increasing its estimate for the call on its oil next year by a hefty 510,000 bpd to 30.82 mbpd. This is in large part to due to waning non-OPEC supply growth which it sees shrinking by 130,000 bpd as low prices take their toll on US producers. Staying with the cartel, its Secretary-General hinted at a rebalancing of the oil market as early as next year, a viewpoint mirrored by comments from the Kuwaiti oil minister who also revealed that there were no calls for a change in production policy from the organisation’s members. Meanwhile, speculators have increased bets on rising ICE Brent crude prices by 13,131 lots in the week to October 6 to the highest since the 21st of July.

Technicals: The contracts are ebbing and flowing a bit as the market experiences the conflict between a positive geopolitical situation and what has been a very bearish, albeit bottomed-out, market. Geopolitical rallies have a voracious appetite for bad news, and do not respond well if not fed. That is why the market is not surging higher. It must now, at the very least, remain over the 5 day MAs around 49.04 WTI; 52.35 Brent; 159.58 Heat; 141.45 RBOB; and 488.00 Gasoil. These are, precariously in some cases, holding. A failure would cause a “slingshot” move to the 8 day MAs and reflect a market cooling off. More work is needed in order to go higher.

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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.