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PVM Midday Report 12 January 2016

Published Tuesday, January 12th, 2016

Headlines

  1. UAE dismisses prospect of OPEC emergency meeting after request made by two members
  2. Chinese apparent oil demand projected to rise by 4.9% this year to 11.37 mbpd
  3. Iraqi Basra crude loadings set to come close to record high in February at 3.63 mbpd
  4. Blast rocks Istanbul after suspected suicide bomber leaves 10 dead and 15 wounded
  5. UK industrial production contracts by a bigger-than-expected 0.7% in Nov from Oct

Oil                                                                                              

Fundamentals: Rumours are rife that the new-year slump in oil prices will prompt OPEC to re-evaluate its production policy after it was revealed that two member countries have called for an emergency meeting to be held. Such an eventuality was however quickly dismissed by the UAE Energy Minister who reiterated that time was needed for the cartel’s strategy to prevail. Elsewhere, loadings of Iraqi Basra crude have been set at 3.63 mbpd in February which is 8% higher than this month’s levels and within touching distance of the record seen last November of 3.65 mbpd. Meanwhile, Chinese apparent oil demand is projected to rise by 4.9% this year to 11.37 mbpd. This comes in spite of figures pointing to a slowdown in Chinese car sales with y-o-y growth of 4.7% in 2015 which compares to 9.9% in 2014 and 16% in 2013.

Technicals: The contracts are rebounding off the day’s lows but the downtrend conditions remain in full swing and as such rallies to the 5-day MAs are good selling opportunities. They are 32.62 WTI; 32.93 Brent; 104.56 Heat; 113.40 RBOB and 302.50 Gasoil. Otherwise look for an imminent resumption of the nosedive in prices with downside targets still greenlighted at 26.80 on WTI; 25.06 Brent; 90.15 Heat; 78.50 RBOB and 272.25 Gasoil. Stick with the trend and do not 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.