Technical & Fundamental Oil Reports Specialists

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PVM Midday Report 06 January 2016

Published Wednesday, January 6th, 2016

Headlines

  1. Four oil tanks on fire after clashes between IS militants and Libyan security forces
  2. API reports substantial 5.6 million bbl fall in weekly US crude oil stockpiles
  3. Nigerian crude oil exports forecast to dip in February from multi-month high in January
  4. Eurozone private-sector activity survey ends 2015 at a four-and-a-half-year high

Oil                                                                                              

Fundamentals: Clashes between security forces and IS militants near the Libyan oil ports of Es Sider and Ras Lanuf have resumed for a third day as three more oil storage tanks catch fire taking the total to four. Nigerian crude oil exports are expected to come under pressure in February and are seen falling to 1.83 mbpd from the three-month high of 1.99 mbpd planned in January. The API has reported a hefty 5.6 million bbl fall in US weekly crude oil stockpiles while gasoline and distillate inventories rose by an equally weighty 7.1 million bbls and 5.6 million bbls respectively.

Technicals: The market is in serious trouble. If WTI closes below 35.35 and Brent below 35.94 then the odds are that the whole complex will plunge. At the time of wring there can be virtually no wining longs in the market. Maximum pain is lower and that’s probably where we are heading. The key technical indicators are negative. WTI has not only moved below its key long term support at 35.35 but filled the gap at 34.86 – the next target. A move confirmed by a close (m/c) below 34.86 would green light a leg down to 33.98, with potential to go much lower. Brent acquires a target to 34.55 on a m/c below 35.94. Heat will have a target to 102.47 on a close below 110.05. RBOB has hit its intra-day target to 119.51 and now a m/c below there would activate a leg down to 115.52. Gasoil has a target to 313.25. Look for lower numbers. It is not advised to be long.

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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.