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PVM Midday Report 04 December 2015

Published Friday, December 4th, 2015

Headlines

  1. China expected to double rate of strategic oil purchases next year to 70-90 million bbls
  2. Saudi’s al-Naimi hints that rising oil demand may help to absorb increase in Iranian output
  3. Iraq’s Oil Minister sees its crude oil output rising to an average of 4.5 mbpd in 2016
  4. ECB Vice-President berates markets for forming heightened easing expectations
  5. German industrial orders rise by 1.8% m-o-m in October

Oil                                                                                              

Fundamentals: The OPEC crude basket price has slipped to its lowest in seven years at $37.89/bbl as the cartel meets to discuss its production strategy. The organisation is all but guaranteed to maintain its output ceiling of 30 mbpd despite calls from several members led by Venezuela for a production cut to shore up prices. Staying with OPEC, Saudi’s Oil Minister has hinted that improving global oil demand growth prospects will help absorb next year’s expected increase in Iranian oil production. Meanwhile, reports suggest that subdued oil prices will prompt China to expand its crude storage capacity by 70-90 million bbls next year as it aims to double the rate of its recent strategic crude oil purchases.

Technicals: The corrective move higher is still gathering momentum, but there’s more work to do yet before this turns into anything more than a correction. RBOB is just about holding the key c/p at 129.38 and testing the lowest s/t MA (the 13) resistance at 130.00. WTI is above the 5, but below the 8 and 13 around 41.76. Brent is similar. It is above the 5 but testing the 8/13 combo around 44.55/66. Heat is above the 5 and 8 and also testing the 13 around 138.29. Gasoil is above the 5 around 403.00 and below the 8 around 410.75. The contracts need to move and close over the s/t MAs – not just the 5 – to be doing anything more than rallying to resistance.

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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.