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PVM Midday Report 11 January 2016

Published Monday, January 11th, 2016

Headlines

  1. EU’s Head of Foreign Affairs hints that Iran sanction relief could be very soon
  2. BoA lowers 2016 Brent and WTI price forecasts to $46/bbl & $45/bbl respectively
  3. Speculators boost ICE Brent NSL by 21,380 lots to 8-week high of 185,052 contracts
  4. Kuwait raises OSP for February crude oil loadings to Asia by +70cts/bbl over January
  5. OECD survey points to stable growth in China, eurozone; seen easing in UK, US

Oil                                                                                              

Fundamentals: Oil price forecasts continue to be torn up following the dismal start to the year with BoA Merill Lynch trimming its 2016 Brent and WTI price projections by $4/bbl and $3/bbl respectively from a previous estimate to $46/bbl and $45/bbl. Elsewhere, Kuwait has tracked the pricing adjustments made by fellow OPEC-members Saudi Arabia and Iraq in increasing their crude OSPs for February loadings to Asian buyers. Staying with the oil cartel, Saudi crude oil output was seen holding steady in December at 10.14 mpbd from 10.18 mbpd in the previous month according to an unnamed source. Meanwhile, speculators have boosted their bets on rising ICE Brent prices by a hefty 13% in the week to 5 January to an eight-week high of 185,052 contracts.

Technicals: The downtrend is unrelenting and supports are coming under increased pressure. The focus remains firmly on WTI’s objectives lower at 32.40 and 32.10 – these are the most important supports across the board. A move and close below the aforementioned targets will open the trap door to lower number for the rest of the complex to 32.16 Brent; 102.47 Heat; 110.84 RBOB and 272.25 Feb’ Gasoil. 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.