PVM Midday Report 13 June 2016
Headlines
OPEC hints at tighter oil balance in 2H 2016; output down 100,000 bpd in May
Chinese implied oil demand falls by 380,000 bpd in May y/y to 10.24 mbpd
Iran’s biggest oil…
Introduction. The expected and inevitable upside correction has been taking place for the last three trading sessions. The extent of this retracement is, however, unexpected. The contracts rallied hard on Friday and are making further advances this morning. As far as technicals are concerned for reasons outlined below it is recommended to be long only in Brent and Heating Oil whilst being flat on the rest makes sense. The reason to say this is that despite all the daily slow stochastics being positive only the aforementioned two contracts closed above the 13-day M/As. If the other three follow suit today then there is nothing wrong with acquiring length on them too. The 13-day M/A on WTI is currently at 31.86. It has been broken above this morning but it is actually not this level but the 2008 low at 32.40 which should be used to go long. Such a move will likely push the price up to 33.55 and 34.96, the 50% and 61.8% retracement levels of the recent sell-off.
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