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PVM Midday Report 13 January 2016

Published Wednesday, January 13th, 2016

Headlines

  1. Chinese crude oil imports climb to record high of 7.82 mbpd in December
  2. UBS slashes its 2016 Brent and WTI price forecasts to $42.50/bbl and $40/bbl respectively
  3. Barclays warn that oil and gas upstream spending could fall by up to 20% in 2016
  4. Iranian authorities release US navy crews
  5. Eurozone industrial output falls by a bigger-than-expected 0.7% in Nov from Oct

Oil                                                                                              

Fundamentals: Chinese crude oil imports swelled in December by 21.4% on the month and 9.3% on the year to a record high of 7.82 mbpd as Beijing continued to make the most of subdued oil prices to increase strategic oil fills. Imports for the whole of 2015 also hit a record after averaging 6.71 mbpd. UBS has become the latest financial institution to trim its oil price forecasts with 2016 Brent and WTI now seen averaging $42.50/bbl and $40/bbl respectively, down $15 and $12.50 from a previous estimate. Meanwhile, Barclays has revealed that oil and gas capital expenditure is set to fall by as much as 20% this year if prices remain around $40/bbl.

Technicals: The 5-day MA gap theory has come into play and the contracts are undergoing what is expected to be a short-lived upside correction towards the lowest daily M/As. These are 31.89 WTI; 32.25 Brent; 102.43 Heat; 110.04 RBOB and 307.05 Gasoil. The trend still remains firmly down and it is recommended to sell into these fleeting rallies. Any price strength will only be temporary and as such 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.